Hiring Boost: Companies that Add Jobs in Artificial Intelligence Increase Revenue
New research from Columbia Business School finds that fears of artificial intelligence may be misguided, as companies that expand hiring in artificial intelligence see increases in both sales and market share as well as a boost in employment
NEW YORK – For companies like Google, Microsoft, and Facebook, investments in cutting-edge technologies like artificial intelligence (AI) have become key to long-term growth. It is not just tech giants who are benefiting from investments in AI – the technology is being applied across many industries and use cases. While there are clear benefits in using artificial intelligence to improve products and streamline operations, there is little data available to outline how AI directly impacts sales. But new research from Columbia Business School Professor Tania Babina finds that when businesses invest in AI outside of the technology sector – including companies like General Electric, Morgan Stanley or GlaxoSmithKline – they experience an overall increase in sales and employees. In the study Artificial Intelligence, Firm Growth, and Industry Concentration, Babina concludes that companies that hire employees to perform artificial intelligence tasks increase their sales up to 14.6% and expand both their product offerings and geographic reach.
Babina and co-authors University of California Berkeley Assistant Professor Anastassia Fedyk, University of Maryland Assistant Professor Alex He, and AI For Good Foundation CEO James Hodson analyze job postings from Burning Glass Technologies and employment profiles from Cognism, focusing on human capital as a new measure for AI investment. Babina’s team ultimately finds that hiring more AI-related employees creates a self-reinforcing cycle: as larger companies invest more in AI-related personnel, sales and market share grow and fuel further AI investment.
“For decades, we thought that artificial intelligence would be the future of technology, but we always looked to it with fear that investment in AI would ultimately take away jobs,” said Columbia Business School Assistant Professor of Finance Tania Babina. “But today, our findings show that investment in AI not only increases company sales and expands geographic reach, but it creates jobs, opening up new opportunities that would not have existed before. This information is vital for any company that needs a push to be bold and look to the future.”
The team collected 42 million resumes and job postings from the two job search databases, and matched the companies adding new employees with Compustat data on sales, employment, income, and R&D expenditures. In order to identify AI-related jobs, they looked for skills linked to four fundamental AI concepts in job descriptions: “machine learning,” “natural language processing,” “computer vision,” and “artificial intelligence.” From 2010 to 2018, Babina and her team identified a positive correlation between revenue growth and hiring of artificial intelligence workers, finding that companies such as Apple, Johnson & Johnson, and Goldman Sachs experienced substantial sales growth over that period as they expanded AI capabilities.
Key Findings include:
- Big Companies Out Front: Larger companies, in terms of both sales and market share, are more likely to invest in AI than smaller companies. AI investment is most pronounced in companies that enjoy larger cash reserves, higher profits and greater R&D capacity.
- AI-Fueled Growth: AI has created a positive feedback loop where large companies grow even larger from AI investments, enhancing their capability to make higher AI investments.
- Extensive Sales Increase: Companies that invest in AI grow more – increasing the share of AI workers corresponds to an increase in sales of up to 14.6%, a 13.3% increase in employment, and a 1.3 percentage points increase in market share.
“AI is proving to be a revolutionary technology that fuels growth,” Babina said. “Companies that begin investing heavily into AI could experience expansion that would have otherwise taken years to penetrate, and this rapid expansion is visible in every industry.”
To learn more about the cutting-edge research being conducted at Columbia Business School, please visit www.gsb.columbia.edu.
About the researcher
Professor Tania Babina joined the Columbia Business School in 2016. She received a Ph.D. from the Kenan-Flagler Business School at the University of North...Read more.