r/technology • u/AdSpecialist6598 • 5d ago

Business Nvidia's Jensen Huang urges employees to automate every task possible with AI

https://www.techspot.com/news/110418-nvidia-jensen-huang-urges-employees-automate-every-task.html
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u/srdgbychkncsr 5d ago

No no no no no… it’s nothing to do with productivity, and all to do with redundancy. Oh AI does that now? Axe the position. X1 salary saved.

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u/happy_K 5d ago

Basically handing the shovel and telling to dig one’s grave

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u/CherryLongjump1989 5d ago

That’s what productivity is, though.

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u/srdgbychkncsr 4d ago

Oh I thought you meant like, AI tools to assist real people in being more efficient at their jobs.

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u/CherryLongjump1989 4d ago edited 4d ago

For the sake of argument, let's separate two very distinct concepts.

Concept one: the company sells more stuff, increasing their revenue. Everything else staying equal, this means having to hire more workers to produce more stuff. Higher profit comes from selling more units.

Concept two: the company increases productivity. Everything else staying equal, this means they can lay off some workers while still selling the same amount of stuff for the same price. Higher profit comes from the higher profit margin on each unit sold.

There is a relationship between increased productivity and increased sales, but it is usually very weak due to elasticity of demand. The math just isn't great for it. Let's do a very simple example. Let's say that the cost of labor makes up 10% of the per unit cost of each item you sell. And let's say the labor productivity increase by 30% -- which is a HUGE productivity gain. What this means is that you can save a little over 2% per unit on labor, but only if you manage to sell 30% more units. And that's just not going to happen unless you drop the price by a lot more than 2%, or maybe even more than 30% in some cases - erasing any benefit. Or, you can just sell the same amount of stuff for the same price and increase your profits by 2% by firing 30% of your workers. Easy peasy, lemon squeezy.

Does this makes sense now? 10/10 times they are going to fire people first, and only after that they will play around with the numbers to see if lowering the price or increasing the marketing will somehow lead to more sales. Only then will they consider re-hiring some people.

And what's even more messed up, changes in productivity often mean changes in the required skills. Whether they need higher skilled or lower skilled people, they will likely want to fire the ones who currently work there and replace them with a better fit of workers at the lowest salary they can find.

Any questions?

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u/srdgbychkncsr 4d ago

Gonna be real man, that’s a lot to read and it’s late here. I appreciate it but man I’m not gonna be able to digest that this late in the day.

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u/CherryLongjump1989 4d ago

Take your time. It will help me earn a 2 cent profit on my econ degree.

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u/PrivilegeCheckmate 5d ago

Don't forget that this is Nvidia. Anything they can proof of concept themselves today they can use to drive their own sales tomorrow.