ServiceNow boss warns AI could push grad unemployment past 30%

McDermott argues digital workers will handle much of the grunt work once used to train junior staff

Unemployment rates among recent graduates could climb above 30 percent because so many early career routine tasks will be performed by AI agents, ServiceNow CEO Bill McDermott has said.

His views echo research findings that show organizations across the globe are slashing hiring for junior and entry-level positions.

Speaking to CNBC, McDermott said it was natural to be concerned about jobs given the likely impact of AI agents on workforce planning and hiring, pointing to graduate unemployment rates, which sit at around 5.6 percent, according to recent data.

"It could easily go into the mid-30s in the next couple of years. What's happening now is that for the non-differentiating roles, so much of the work is going to be done by agents. It's going to be challenging for young people to differentiate themselves in the corporate environment," he said.

McDermott also claimed that ServiceNow's AI platform could handle 90 percent of the tasks that humans provide in customer service. He said companies such as Pepsi, Panasonic, and Nvidia are already using the platform.

"That will definitely put a damper on how many people you need to hire," he opined.

In October last year, a study from the British Standards Institution found young college grads are being hit hardest by AI adoption. The survey of business leaders from eight countries around the world – including the UK and US – found that 39 percent have already reduced junior and entry-level headcount in favor of greater AI adoption. Another 43 percent expect to further reduce entry-level roles in the next year in favor of AI and 50 percent "specifically" said AI is helping them reduce headcount.

However, tech analyst group Gartner previously warned that disproportionate cuts to graduate jobs could have a long-term impact on workforce structure.

Highlighting the danger of "pipeline choke," Gartner pointed out that mundane bits of work on which junior staff once cut their teeth would no longer be available in the same numbers, reducing the supply of more experienced staff in years to come.

"When a senior staff delegates to AI some of the work that juniors used to do... that approach captures value, but it can stall your growth, so pair it with a robust talent development strategy, or risk choking your future pipeline," said Gabriela Vogel, Gartner VP analyst. ®