Europe’s Startups Say AI Will Drive More Hiring

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Europe’s Startups Say AI Will Drive More Hiring

In January of this year, the International Monetary Fund predicted that artificial intelligence would have a negative impact on about 30% of jobs in advanced economies. No surprises there, perhaps. As AI is adopted by organizations of all sizes, the expectation is that while new jobs will be created, others will be lost or downskilled.

But will there be net job losses? Well, perhaps not in Europe’s startup sector. According to a new survey by VC firm Index Ventures and not-for-profit founder support

organization Slush, the effect of AI on startup jobs will be positive. Rather than cutting back on employment, startups see the technologies coming onstream as an engine of growth. Many plan to hire more people.

Based on interviews with 600 European startups, the study finds that almost half (49%) expect to increase headcount as a direct result of AI while 29% plan to maintain staffing at current levels. There is, the report says, a broad consensus that AI will boost efficiency, drive higher productivity and open up new opportunities. For many employees, the new tools will augment and enhance the work they already do.

Jobs Optimism

Hannah Seal is a partner at Index Ventures. Speaking to her on a video call, I start by asking about the thinking behind the research. As she acknowledges, even before the survey was commissioned the VC firm was bullish about the positive impact of AI on the technology startup sector.

“There have been a lot of pessimistic statements about how AI is going to take jobs," she says. “But that really wasn’t what we were seeing on the ground. When we talked to startups we saw a lot of optimism and talk of new jobs being created.”

The survey, she says, has provided some statistical evidence that the AI revolution will be net positive for startup sector employment.

But what does that mean in practice? What we already know about AI is that not all jobs will be affected equally. Many roles will be complementary to the new technology, meaning that the tools on offer will offer assistance to human employees who are themselves highly skilled. Those jobs won’t necessarily be replaced, even if the nature of the work does change. However, other employees are likely to see their current roles partially or wholly phased out. For instance, AI-driven chatbots are could considerably reduce the need for call center agents.

Startup-Specific

Those are the broad brush strokes, but startups - particularly those in the tech sector - have their own requirements. In addition to the people who work in finance, HR, customer service and sales, they tend to employ a higher-than-average percentage of coders and technologists. More AI will create a greater requirement for people with appropriate skills. So will the expected new hiring mainly be confined to people who are experts in or familiar with AI?

Up to a point. As Hannah Seal sees it, there will be demand for people with the necessary specialisms. This does not mean startups will be competing to hire Ph.D.-level researchers as much of the foundational work - say around developing the technology and building models - has already been done. “Most companies will be working at the application layer,” she says. “You need people who are familiar with the technology but not people who are deeply technical.”

Making Companies More Efficient

However, Seal stresses that startups are not simply planning to increase headcount by hiring more IT-literate staff. They are also seeing growth opportunities that will ultimately preserve or create jobs across the board.”

“AI is making companies more efficient, so they can do more with less,” she says. “But that doesn’t mean they will do less. They do more. They do more projects.”

That in turn should feed through to more products and customers so the expectation is that faster-growing companies will feed through to more employment. “AI is making companies more financially viable. Better margins. Better unit economics. Obviously, that’s what we want as an economy,” adds Seal.

It has to be said that some areas of employment could be more protected than others from any negative impact that arises from the adoption of AI. For instance, coders who are working with Co-pilot will become more productive. The opportunity, therefore, is for startups to build new products at a faster rate. Seal says, is unlikely to lead to job cuts. “They (startups) don’t make their engineers redundant. They do new things,” says Seal.

The situation may be more nuanced for employees working in, say, customer support sales or marketing. For instance, automated chatbots can handle an increasing number of queries. That could enable startups to provide 24/7 support services to customers while also laying off some team members. Alternatively, those team members could be redeployed or spend more time dealing with complex or difficult cases. Those are decisions individual startups will make. Equally, faster growth could mean that the number of customer support agents rises to cope with increasing numbers of complex queries. .

Antoine le Nel is Marketing and Growth Officer at digital bank Revolut. Commenting on the report, he cited marketing as an area where staffing numbers could be mainained while the business grows.

“AI won’t necessarily reduce headcount in marketing, but creates more scaling opportunities,” he said. “It will help us scale to more than 50 countries through localized content and multiple channels while not diluting our talent. The challenge when we scale is that it can dilute talent as we increase team size. AI offers us the incredible ability to scale while keeping teams small, agile, and highly talented.”

New Ways Of Using AI

One thing seems certain. Startups see AI affecting roles in just about every department. “A lot of our founders are saying AI must permeate the organization,” she says. “One founder we work with has tasked departments to find ways of using AI.

Adoption is patchy. Seal says that startups are already using AI widely in areas like software engineering and customer support. In contrast, the pace of experimentation and uptake is lower in functions such as HR, legal or finance. That’s partly down to the risks associated with a technology that is still relatively new and unfamiliar.

The survey finds that employees are seeking to maintain their role within startup companies by proactively building their own AI skills. Again, that doesn’t necessarily mean taking a university-level course in machine learning. It’s more about becoming familiar with the new tools. “The reality is that it’s moving so quickly and you have to continually learn and upskill,” says Seal.

In theory at least - we are after all at the beginning of an adoption curve - Startups see AI as a means to grow faster and possibly employ more people. However, as in the wider business world, roles will undoubtedly change. For employees that will mean taking steps to keep up with the technology.