UK Firms Cutting Labour Costs With AI

AI has disruptive potential, with a focus on tech firms gaining. But some UK firms are already looking at how to cut costs, with certain companies likely to benefit more than others.

AI Takes Over Customer Service and Finance

Last month, BT brought home both the business and social impact of AI after announcing massive layoffs in a bid to increase profitability. The company planned to axe 55,000 jobs, or over 40% of its workforce. The headline-grabbing part of the announcement was that around 20% of those jobs would be replaced by AI. The company's CEO, Philip Jansen, was effusive about the potential of the technology. What roles would be replaced has not been made available, but the speculation is that they would come from customer service and payment processing.

BT is not alone; over a quarter of European tech firms plan to cut jobs in response to the incursion of generative AIs like ChatGPT. Tech jobs (coders, programmers and data analysts) are at the top of the list of jobs that might be reduced thanks to AI. It's even reported that the creator of ChatGPT is looking to use its AI to replace some of its software engineers. The second sector on the list is finance, with 14% of finance employees thinking their jobs are on the line because of AI.

Business Landscape Changing

About a third of companies see productivity increasing due to incorporating technologies like ChatGPT. The areas with the most companies expect to see those marketing and public relations increases. So far, media companies have talked a lot about the impact of AI on the market and different companies but haven't made any announcements themselves. WPP, for example, provided a generic statement saying it was incorporating generative AI in its workflow but did not provide any financials.

Another company that could see gains is Experian, which already used AI analytics before ChatGPT became mainstream and has more experience with the technology. More to the point, while companies like BT, Vodafone, or even Sainsbury and Ocado might or might not see gains when implementing AI, the company that will provide them with the data analytics needed to develop AI solutions will win either way. Experian might not be the headline-leading high flier for AI, but it could generate a more steady income stream from helping others implement the technology.

Experian in Rising Wedge or Long-Term H&S

Although price action in the Experian stock resembles a head-and-shoulders pattern in the long term, the diagonal structure of the 2240-3150 leg might prove otherwise. If bulls can reclaim the regional peak, the stock should be ripe for an attempt at the all-time high of 3690 via the 3410 resistance. Conversely, losing 2240 will expose the stock to the 2k handle and perhaps lower. In the medium term, a downward move towards the local low of 2530 or lower will not invalidate the rising wedge thesis but rather delay its completion with a deeper, longer-lasting correction.

Key Takeaways

Jobs in tech and finance are at the highest risk in the UK as companies are turning to AI for cutting labour costs, with BT among the companies announcing massive layoffs. However, incorporating AI also has the potential to increase productivity in areas such as marketing and public relations. Experian is a company that could see gains by providing data analytics to help others implement the technology.