AI Impact on Entry-Level Tech Jobs - New Research

The Evolving Landscape of AI and Employment

The potential for artificial intelligence (AI) to displace human workers has been a topic of extensive discussion.

Determining whether AI is currently impacting job markets remains challenging, but a recent World Economic Forum survey indicates that 40% of employers are planning workforce reductions in areas where tasks can be automated by AI.

Emerging Trends in Tech Hiring

Researchers at SignalFire, a venture capital firm specializing in data analysis of LinkedIn profiles – tracking over 600 million employees and 80 million companies – suggest initial signs of AI's influence on recruitment practices are becoming visible.

Analysis of hiring patterns revealed a decrease in the recruitment of recent college graduates by tech companies in 2024, compared to the previous year.

Concurrently, these same tech companies, particularly the top 15 “Big Tech” organizations, have increased their focus on hiring professionals with existing experience.

Data on Graduate Recruitment

SignalFire’s findings show that Big Tech firms reduced their hiring of new graduates by 25% in 2024, when contrasted with 2023 figures.

Startups also experienced a decline in graduate recruitment, with an 11% decrease compared to the prior year.

While the exact number of fewer graduates hired wasn’t disclosed, a SignalFire representative confirmed the reduction amounted to thousands.

AI as a Contributing Factor

Although the adoption of new AI tools may not be the sole explanation for this trend, Asher Bantock, SignalFire’s head of research, believes there is “compelling evidence” suggesting AI is a substantial contributing element.

Entry-level positions are particularly vulnerable to automation due to their often repetitive and low-risk nature, characteristics that generative AI excels at handling.

The expanding capabilities of AI in areas like coding, debugging, financial analysis, and software installation may lead companies to require fewer personnel for these tasks.

Consequently, certain entry-level roles traditionally filled by new graduates could become redundant.

Real-World Examples of AI Impact

Gabe Stengel, founder of AI-powered financial analysis startup Rogo, shared his experience at a recent financial technology summit.

He stated that Rogo’s tool “can perform nearly all the tasks I undertook when analyzing companies” during his time at Lazard investment bank, including preparing materials and conducting financial due diligence.

While major investment banks haven’t yet implemented explicit reductions in analyst hiring due to AI, reports indicate that firms like Goldman Sachs and Morgan Stanley previously contemplated cutting junior staff hires by as much as two-thirds.

They also considered lowering the compensation for those they did hire, as the work involved is now less demanding with the assistance of AI, as reported by the New York Times.

Demand for Experienced Professionals

Despite the potential threat to lower-skilled jobs, the demand for experienced professionals within the tech sector continues to rise.

SignalFire’s report indicates that Big Tech companies increased hiring of professionals with two to five years of experience by 27%.

Startups also saw a 14% increase in hiring individuals with similar levels of seniority.

The Paradox for New Graduates

A challenging situation arises for recent graduates: they require experience to secure employment, yet gaining experience necessitates being hired.

Heather Doshay, SignalFire’s people and talent partner, notes that this predicament is significantly worsened by the influence of AI.

Adapting to the New Reality

Doshay advises new graduates to prioritize mastering AI tools.

“AI will not replace your job if you are proficient in its utilization,” she emphasized.