The rapid integration of artificial intelligence across industries is poised to significantly reshape the labor market, potentially creating substantial job displacement for entry-level professionals. ServiceNow CEO Bill McDermott has voiced concerns that this wave of AI adoption could lead to unemployment rates reaching “mid-30s” for recent college graduates within the next few years.
Speaking on “Squawk on the Street,” McDermott highlighted that a substantial portion of tasks will soon be managed by AI-driven agents. This shift, he warned, will present a formidable challenge for young professionals seeking to establish a distinct presence and demonstrate value within corporate environments.
Current data from the Federal Reserve Bank of New York already paints a concerning picture. As of the close of 2025, the unemployment rate for recent college graduates stood at approximately 5.7%. More alarmingly, the underemployment rate reached a four-year high of 42.5%, indicating a significant mismatch between graduates’ qualifications and the roles they are securing.
Across the business landscape, companies are increasingly leveraging AI tools to streamline operations and reduce overhead. This trend is directly translating into workforce reductions. Last month, Block announced a significant restructuring, planning to lay off nearly half of its workforce as AI takes over more operational functions. Similarly, software firm Atlassian, which has experienced a notable stock decline amid fears of AI disruption, revealed plans to cut approximately 10% of its staff to reinvest in AI initiatives.
Unlike previous technological revolutions that primarily impacted manufacturing or specific sectors, experts observe that AI is now actively encroaching upon a broader spectrum of white-collar roles. Fields such as coding, marketing, and customer service are witnessing the automation of tasks previously performed by human employees. This enhanced productivity allows companies to achieve greater output with a leaner workforce, thereby reducing the need for extensive hiring.
This sentiment is echoed by other industry leaders. Palantir CEO Alex Karp has articulated a vision for scaling revenue tenfold while simultaneously reducing headcount, a clear indication of how AI is expected to drive efficiency. Amazon CEO Andy Jassy has also indicated that the e-commerce giant will utilize AI tools to optimize its corporate workforce.
McDermott further elaborated that ServiceNow’s AI-powered solutions are designed to help businesses achieve substantial savings in hiring costs. He pointed to ServiceNow’s success in automating 90% of customer service use cases that previously required human intervention. This not only enhances efficiency but also enables companies to maintain or even grow their free cash flows and revenues without necessarily increasing their headcount.
“I do think it’s coming quicker than people anticipate,” McDermott concluded, underscoring the urgency with which businesses and individuals alike need to adapt to the evolving landscape shaped by artificial intelligence.
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