AI saves tech firm $100 million in headcount costs
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ServiceNow isn't just selling AI-powered tools to customers. It's using the technology to shrink its own hiring plans, projecting $100 million in cost savings this year.
Why it matters: The automation software company is the latest tech player to show how AI can drive cost cuts, a boon for margins, but a potential red flag for future tech job seekers.
The big picture: AI could power a white-collar bloodbath, as the CEO of Anthropic recently told Axios.
- Others, like Jensen Huang of Nvidia, said AI will create more jobs, but either way, it's an unsettled path for workers watching their skillsets being overtaken.
Driving the news: ServiceNow beat second-quarter earnings expectations Wednesday and issued better than expected guidance.
- The earnings beat was driven in part by customers utilizing ServiceNow tools to for productivity gains and cost savings, but the forward guidance was driven in part by "continued AI efficiencies we're seeing internally," ServiceNow CFO Gina Mastantuono told Axios.
What they're saying: The firm's $100 million in projected cost savings is a result of "less headcount that we're planning on hiring today in 2025 versus the expectation at the beginning of the year," Mastantuono said.
- AI agents are driving productivity across IT and customer support. Case resolution time for customers has decreased by 50% thanks to AI agents.
- These productivity gains allow workers to focus on "more complex issues" and spend more time on AI training and upskilling, Mastantuono said.
Be smart: This is part of a growing trend in this earnings cycle. Companies are being more vocal about how they're using AI to power profits and slash costs in their quarterly results.
- Delta signaled this with its use of AI-powered ticket pricing. Northern Trust is driving productivity and reducing "manual effort" thanks to AI.
- Coca-Cola CFO John Murphy mentioned the firm's "productivity agenda" in the context of an analyst question on the role of AI at the company.
The bottom line: AI is the story this earnings season, not just because of the results from AI companies, but because of how companies more broadly are now leveraging the technology to cut costs, human ones included.
