Bay Street, companies are charging ahead with AI.Nathan Denette/The Canadian Press
Lightspeed Commerce Inc. LSPD-T has slashed its customer support team. Shopify Inc. SHOP-T has grown its revenue without adding a single net new hire in two years. And Canadian Imperial Bank of Commerce CM-T has saved one million work hours by way of automation, reaching its goal one year ahead of schedule.
These are just a few examples of how Canadian companies are transforming their operations as they rush to adopt artificial intelligence technologies, forcing a rethink of staffing needs. For executives, these disclosures are held up as investor-pleasing wins in AI implementation.
But for white-collar workers, the speed and scale at which AI tools are changing – and the pressure on companies to realize efficiency gains – are conjuring fears of widespread job losses in roles that were previously seen as somewhat immune to economic forces.
To date, there is limited statistical evidence of AI-related layoffs or hiring freezes in Canada. But anecdotes have started to emerge on earnings calls.
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The Globe and Mail combed through thousands of calls for companies listed on the Toronto Stock Exchange to look for discussions about AI and hiring practices. At least a dozen companies have acknowledged a reduction in employee headcount, or that they intend to freeze hiring and possibly downsize their workforce in the future, because of AI.
To be sure, many more companies are engaged in public discussions of the technology. On investor calls, equity analysts are keen to extract any information on AI usage from executives. By and large, those executives steer clear of speaking about staffing levels, instead focusing on how AI will boost productivity and restructure workflows.
But some companies – and especially those in tech – have been open about their wins. AI, they say, can replace jobs done by humans, and that replacement has already started.
“These AI tools are not expensive,” said Pedro Antunes, chief economist at Signal49 Research, formerly known as the Conference Board of Canada. “Firms in Canada are looking at their balance sheets and then looking at AI and asking what jobs can be replaced cheaply.”
At Lightspeed, a Toronto-based software company, big changes are afoot. The company has “significantly reduced headcount” of its customer service support team because AI resolved “over 80 per cent of inbound chat interactions” with flagship customers, chief financial officer Asha Hotchandani Bakshani said on a Nov. 6 investor call. This helped the company boost overall gross margins, she added.
When asked how many employees were laid off, Ms. Hotchandani Bakshani told The Globe she was cautious about “drawing a straight line between a single technology and staffing decisions.” The focus, she said, is not on setting targets for workforce reductions, but using AI to improve service quality.
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At Shopify, company executives have frequently noted how they’re able to build new products without growing the size of their workforce because of how quickly the e-commerce giant has embraced AI. Chief financial officer Jeff Hoffmeister told analysts last November that staffing levels have remained the same for two years.
François Boulanger, the president and chief executive of Montreal’s CGI Inc., told investors in January that the company has not grown its headcount in over a year because of expanding AI use.
With so many companies choosing to not grow their workforces, labour advocates have raised concerns that AI could have disastrous effects on entry-level positions for knowledge workers.
In the legal field, for example, tools such as CoCounsel, a generative AI product from Thomson Reuters Corp., can perform research and analysis work that used to be handed off to interns, articling students and entry-level lawyers.
A senior partner at a major Bay Street law firm said that some junior lawyers are struggling to find their place in the firm’s hierarchy because senior lawyers are frequently using AI legal tools instead of asking juniors for help. The partner said AI is simply more efficient, as opposed to training a new lawyer in case history or technicalities of the law. The Globe is not naming the partner because they were not allowed to speak publicly about internal hiring practices.
In Canada, these anecdotes don’t necessarily add up to a meaningful statistical trend. Job vacancies have plunged in a variety of industries over the past few years, in tandem with higher interest rates and sluggish economic growth. Surveys also show that companies are hesitant to add employees when U.S. trade policy is so erratic.
Because of these forces, it’s tough to pinpoint exactly why some entry-level workers are struggling to secure jobs, said Kaylie Tiessen, a labour economist with Toronto-based think tank, the Canadian Shield Institute.
“But we should be thinking ahead,” she added. “What is the government’s strategy if this transformation takes place at a rapid pace?”
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Statistics Canada is tracking the extent to which AI is reducing tasks performed by humans in certain occupations. The effects are quite small in goods-producing industries, such as mining, agriculture and construction.
But in other industries, the exposure is palpable. In the second quarter, 20 per cent of people employed in the real estate sector had their work substituted by AI to a large extent, according to Statscan. Roughly 7 per cent of professional, scientific and technical workers, had a similar experience.
A January report from the agency found that coding-intensive roles, such as software engineers and web designers, were highly impacted by AI, with new graduates in those fields struggling to find work.
But beware of the AI hype, said Fenwick McKelvey, co-director of the Applied AI Institute at Concordia University. “It’s become very hard to distinguish the signal from the noise,” he said. “There is still no consensus on what the actual impact on the workforce will be, and more importantly, whether workforce productivity will genuinely increase.”
The story is perhaps much different south of the border. Large American tech firms have been explicit about how recent corporate layoffs are directly tied to AI adoption.
The global consulting company Accenture PLC said in September that it would cut roughly 11,000 roles across the company, particularly in non-client facing functions, and that it will be “exiting” those who cannot reskill.
Amazon.com Inc. is eliminating 16,000 corporate jobs in the second round of mass layoffs since last October, when it slashed 14,0000 roles in an attempt to cut middle management work that could be done more efficiently by AI tools.
Block Inc., the parent company of payment-services apps Square and Cash App, said in February it would shed 40 per cent of its staff, claiming that AI tools were capable of doing more than human employees. (Many tech commentators questioned whether Block CEO Jack Dorsey was using AI as an excuse after an aggressive hiring spree during the pandemic.)
Mr. Antunes of Signal49 said that the one advantage in Canada is that companies will be slower to adopt AI than their American counterparts. “I cannot imagine that in Canada we will be such rapid adopters of AI that in two years, many jobs will be lost,” he said. His own research suggests that the adoption curve might be between eight and ten years.
Nevertheless, on Bay Street, companies are charging ahead.
In saving one million work hours through automation, CIBC has reduced manual and repetitive work, and staff are focused on “higher-value” activities, CFO Hratch Panossian told analysts in February.
Manulife Financial Corp. CEO Phil Witherington told investors in November that the company had seen a period of rapid financial growth over the past few years, but that its headcount had not changed significantly, owing to AI. He forecasted $1-billion in “benefits” from AI use between 2025 and 2027.
When asked by The Globe about whether those benefits would come from cutting jobs, CFO Colin Simpson said “not necessarily.”
Mr. Antunes anticipates that AI will grow the economic pie as a whole, but emphasized that it’s imperative to not leave people behind.
“It will grow profits, it will grow our GDP, we just have to make sure we are quick to redistribute the wealth,” he said. “And by that, I mean making sure that the revenue gains that accrue to governments are used to retrain and reskill people who will lose their employment.”