AI hiring boom could turn into a surprise tailwind for software: Bernstein

Artificial intelligence could unexpectedly benefit software companies, according to Bernstein analysts. Their research suggests a surge in AI adoption might lead to increased hiring instead of job cuts, countering a common bearish belief about the sector. The analysts argue that businesses utilizing AI heavily tend to expand their workforce more aggressively than companies with minimal or no AI adoption.

This growth in headcount, on average, is more than 10% above control companies and lower-adoption peers. The findings, based on Ramp data, could potentially support software vendors in maintaining their seat-based pricing model, alongside newer pricing structures tied to AI token consumption, infrastructure usage, or return on investment.

Bernstein points out that enterprise clients still prefer seat-based licensing partly due to its predictability. If AI-driven productivity boosts lead to business expansion, software companies might not face as much pressure to abandon seat-based licensing. The positive hiring trends are not limited to engineers and sales teams.

Administrative, customer service, and entry-level roles are also growing among heavy AI adopters, contradicting the assumption that AI adoption would disproportionately eliminate junior and back-office positions. The analyst compares this trend to previous productivity booms, such as those sparked by personal computers and the internet, where companies often reinvest efficiency gains into growth rather than sharply increasing margins, leading to white-collar employment increases during that period.

However, finance, scientist, and operations roles displayed weaker or no statistically significant positive growth, indicating software targeting these functions might receive less support. Bernstein has not altered its software models, price targets, or recommendations based on this analysis.