On Bay Street, companies are embracing AI.Nathan Dennett/Canadian Press
Lightspeed Commerce Inc. LSPD-T has reduced its customer support team. Shopify Inc. SHOP-T grew revenue without adding a single net new hire over two years. Additionally, Canadian Imperial Bank of Commerce CM-T saved 1 million labor hours through automation, reaching its goal a 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 technology, forcing them to rethink their staffing needs. For management, these disclosures are seen as a welcome win for investors in AI implementation.
But for white-collar workers, the speed and scale of change in AI tools, and the pressure on companies to achieve efficiency gains, is raising fears of widespread job losses in roles previously seen as somewhat financially immune.
To date, there is limited statistical evidence regarding AI-related layoffs and hiring freezes in Canada. However, anecdotes are starting to emerge during financial results announcements.
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The Globe and Mail combed through thousands of calls made to companies listed on the Toronto Stock Exchange, looking for discussions about AI and employment practices. At least a dozen companies have acknowledged that AI is causing a decline in their workforces, or that they plan to freeze hiring and cut jobs in the future.
Certainly, more companies are engaging in public discussions about this technology. On calls with investors, equity analysts are keen to extract all the information from management about the use of AI. By and large, these executives avoid talking about staffing levels and instead focus on how AI increases productivity and restructures workflows.
But some companies, particularly technology companies, are open about their wins. They say AI can and is already beginning to replace jobs performed by humans.
“These AI tools are not expensive,” said Pedro Antunes, chief economist at Signal 49 Research, formerly known as the Conference Board of Canada. “Canadian companies are looking at their balance sheets and then looking at AI and considering what jobs they can replace cheaply.”
Big changes are underway at Toronto-based software company Lightspeed. The company’s customer service support team headcount has been “significantly reduced” as AI resolves “more than 80 percent of inbound chat interactions” with key customers, Chief Financial Officer Asha Hochandani Bakshani said on a Nov. 6 investor call. This has improved the company’s overall gross profit margin, she added.
Asked how many employees had been laid off, Hochandani Bakshani told the Globe he was wary of “drawing a straight line between any single technology and staffing decisions.” He said the focus is not on setting headcount reduction targets, but on leveraging AI to improve service quality.
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Shopify executives frequently point out that the e-commerce giant’s rapid adoption of AI has allowed it to build new products without increasing its workforce. Chief Financial Officer Jeff Hofmeister told analysts in November that staffing levels had remained unchanged for two years.
François Boulanger, president and chief executive officer of Montreal-based CGI, told investors in January that the company had not added headcount in more than a year because of its growing use of AI.
With so many companies choosing not to add employees, labor advocates have expressed concern that AI could have a disastrous impact on entry-level jobs for knowledge workers.
For example, in the legal field, tools such as CoCounsel, a generative AI product from Thomson Reuters, can be used to perform research and analysis tasks traditionally left to interns, article writing students, and entry-level lawyers.
A senior partner at a large Bay Street law firm said some junior lawyers are struggling to find their place within 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 than training new lawyers on case history and legal expertise. The Globe is not naming the partners because they are not allowed to speak publicly about internal hiring practices.
In Canada, these anecdotes do not necessarily add up to meaningful statistical trends. Job openings across many industries have plummeted over the past few years as interest rates rise and economic growth slows. The survey also shows that companies are hesitant to add employees when U.S. trade policy is highly unstable.
Kayleigh Thiessen, a labor economist at the Canadian Shield Institute, a Toronto-based think tank, said these forces make it difficult to pinpoint exactly why some entry-level workers are having a hard time securing jobs.
“But we should think ahead,” she added. “If this transformation happens quickly, what is the government’s strategy?”
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Statistics Canada tracks the extent to which AI is reducing human work in certain occupations. The impact on commodity-producing industries such as mining, agriculture, and construction will be extremely small.
But the impact is also evident in other industries. According to Statscan, 20% of people employed in the real estate sector had a significant portion of their jobs replaced by AI in the second quarter. About 7 percent of professional, scientific, and technical workers had similar experiences.
A report released by the agency in January found that occupations that rely heavily on coding, such as software engineers and web designers, are being heavily influenced by AI, and new graduates in these fields are having a hard time finding work.
But beware of the AI hype, says Fenwick McKelvey, co-director of Concordia University’s Applied AI Institute. “It became very difficult to distinguish between signal and noise,” he said. “There is still no consensus on what the actual impact on the workforce will be and, more importantly, whether it will truly increase workforce productivity.”
The story is probably much different south of the border. Major US technology companies have made it clear how recent layoffs are directly tied to the introduction of AI.
In September, global consulting firm Accenture announced it would cut about 11,000 roles across the company, particularly in non-customer-facing roles, and “retire” people who cannot be retrained.
Amazon.com is cutting 16,000 jobs at the company in the second wave of layoffs since last October, when it cut 14,000 middle management roles to eliminate jobs that could be done more efficiently with AI tools.
Block, the parent company of payment services apps Square and Cash App, announced in February that it would cut 40% of its workforce, saying AI tools can do more work than human employees. (Many tech commentators had questioned whether Block CEO Jack Dorsey was using AI as an excuse for aggressive hiring during the pandemic.)
Signal49’s Antunes said one of Canada’s advantages is that companies have been slower to adopt AI than their U.S. counterparts. “With the rapid adoption of AI in Canada, I can’t imagine many jobs being lost within two years,” he says. According to his own research, the adoption curve could take eight to 10 years.
Nevertheless, businesses on Bay Street are pushing ahead.
CFO Hatch Panosian told analysts in February that by saving 1 million labor hours through automation, CIBC was reducing manual and repetitive tasks, allowing staff to focus on “higher value” activities.
Manulife Financial Corp. CEO Phil Witherington told investors in November that while the company has experienced rapid financial growth over the past few years, its headcount has remained largely unchanged thanks to AI. He predicted that between 2025 and 2027, the “benefits” from using AI will be $1 billion.
Asked by the Globe whether such a benefit would result from the layoffs, Chief Financial Officer Colin Simpson said: “Not necessarily.”
Antunes expects AI to expand the overall economic pie, but stressed that it is essential not to leave people behind.
“Profits will go up, gross domestic product will go up. We just need to redistribute wealth quickly.” “That means ensuring that the revenue the government receives is used to retrain and reskill those who lose their jobs.”
