AI Reshaping Tech Workforce New Grads Face Challenges

The question of if and when Artificial Intelligence will begin to replace human workers has sparked numerous discussions.

While it remains difficult to definitively state if AI is starting to assume tasks previously handled by humans, a recent survey by the World Economic Forum revealed that 40% of employers are planning to reduce their workforce in areas where AI can automate processes.

Data Reveals a Tilt Towards Experience

Researchers at SignalFire, a data-driven VC firm that monitors job movements of over 600 million employees and 80 million companies on LinkedIn, believe they are observing the initial effects of AI on hiring.

In their analysis of hiring trends, SignalFire noted that tech companies hired fewer recent college graduates in 2024 compared to 2023. Conversely, tech companies, particularly the top 15 Big Tech businesses, increased their hiring of experienced professionals.

Specifically, SignalFire found that Big Tech companies decreased the hiring of new graduates by 25% in 2024 relative to 2023. Meanwhile, graduate recruitment at startups fell by 11% compared to the year before. Although SignalFire did not disclose the exact number of fewer graduates hired based on their data, a spokesperson indicated it was in the thousands.

Why AI Targets Entry Level Positions

While the adoption of new AI tools might not entirely account for the decline in recent graduate hiring, Asher Bantock, SignalFire’s head of research, suggests there is “convincing evidence” that AI is a significant contributing factor.

Entry-level jobs are particularly vulnerable to automation because they often involve routine, low-risk tasks that generative AI can perform effectively.

AI's emerging capabilities in coding and debugging, financial research, and software installation could mean that companies require fewer people to perform these types of work. The ability of AI to handle certain entry-level tasks suggests some jobs for new graduates could become obsolete in the near future.

Industry Voices AI Impact on Junior Roles

Gabe Stengel, founder of AI financial analyst startup Rogo, began his career at Lazard investment bank, assisting large pharmaceutical companies in acquiring biotech startups. Stengel mentioned at Newcomer’s financial technology summit last week that Rogo’s tool “can do almost all the work I did in the analysis of those companies. We can put together the materials, diligence the company, look through their financials.”

While most large investment banks have not yet explicitly reduced analyst hiring due to AI, executives at firms such as Goldman Sachs and Morgan Stanley have previously considered cutting junior staff hires by up to two-thirds and lowering the pay for those they do hire, as AI makes the work less demanding than before, the New York Times reported last year.

The New Graduate's Catch 22 Amplified by AI

Although AI poses a real threat to low-skilled jobs, the demand from tech companies for experienced professionals continues to rise. According to SignalFire’s report, Big Tech companies increased hiring by 27% for professionals with two to five years of experience, while startups hired 14% more individuals in that same seniority range.

A frustrating paradox emerges for recent graduates: they cannot get hired without experience, but they cannot gain experience without being hired. While this dilemma is not new, Heather Doshay, SignalFire’s people and talent partner, states that AI has considerably exacerbated it.

Navigating the AI Era Advice for Newcomers

Doshay’s advice to new graduates is to master AI tools. “AI won’t take your job if you’re the one who’s best at using it,” she said.