The startling advance of generative AI in recent months, embodied by tools such as ChatGPT and Midjourney, has created tremors that are being felt well beyond the hi-tech sector. The technology’s far-reaching implications are forcing firms across the board to consider how they and their industries will be affected, for better or for worse.
Big business certainly isn’t immune to the impact of this transformational tech. Indeed, senior executives from numerous blue-chip firms have discussed the effects of AI in recent weeks, in forums ranging from earnings calls to industry conferences.
Here’s a look at how a small but diverse selection of FTSE 100 companies are approaching the leap forward in generative AI, based on recent public comments by their senior executives.
1. BT Group
Speculation about the impact of AI on jobs became more concrete in May when BT announced plans to eliminate 40,000 to 55,000 roles by 2030 in its automation drive. The giant telco’s workforce could shrink by more than 40% as a result.
Most of the downsizing will happen as the construction of BT’s full-fibre broadband and 5G infrastructure tapers off and the firm stops running double networks such as 3G and 4G, requiring less labour-intensive maintenance. But other job cuts will result from the digitisation of operations and the automation of customer-service processes. This will push consumers towards web- and app-based tools rather than call centres. BT already uses a support chatbot.
CEO Philip Jansen highlighted the importance of AI to the group’s automation plans during its full-year earnings call on 18 May. He said: “We will be a beneficiary of AI, unequivocally, because we’re a volume business with some 30 million customers. We have lots of people and lots of activity. AI can help us do that more efficiently.”
Jansen also hinted that further advances in generative AI and large language models (LLMs) would prompt more innovation at the company.
“We’ve got a few ideas, but it’s very early days,” he said, adding that their development “needs to be treated with great care”.
2. WPP
The multinational advertising and PR group made its intentions clear back in August 2021 when it acquired London-based AI specialist Satalia, naming the firm’s CEO, Daniel Hulme, as its first chief AI officer. That move looks especially prescient given the surge of interest in generative AI in recent months.
It may create opportunities for roles within the tech sector. It may diminish roles in others
During WPP’s first-quarter earnings call in April, CEO Mark Read noted that the company had been using AI for years, mainly in its media segment for targeting audiences and optimising campaigns.
“I think what’s really changed over the past six months is the application of AI into the creative process of the production of language, video imagery and so on,” he said. “That’s really allowed us the opportunity to use it much more creatively.”
That includes a recent campaign by its Wunderman Thompson agency on behalf of the Iran Democracy Council, a group of female lawyers and activists of Iranian descent. This used OpenAI’s foundational model GPT-4 to create a digital book imagining a brighter future for oppressed women in Iran.
One analyst on the call suggested that the increased use of AI in creative campaigns, while making these more profitable through efficiency savings, might also reduce the fees that WPP could justify charging its clients for the content produced. Read rejected this idea, saying: “I don’t think AI is going to make people suddenly more creative or shorten that process.”
3. Pearson
The digital learning specialist has revealed its focus on AI perhaps more than any other FTSE 100 member lately. Given the potential threat to its business model posed by popular free tools such as ChatGPT, that’s not surprising.
On 1 May, US rival Chegg reported a 5% decline in subscribers and suspended its full-year guidance, citing the impact of ChatGPT. The next day, Pearson’s stock price fell by 15%, even though it had reported a quarterly revenue gain of 6% a week earlier, surpassing its own expectations.
Stressing that 80% of its profits come from outside the higher education sector, Pearson was quick to distance itself from Chegg’s situation. To further reassure investors, it announced a generative AI strategy update on 9 May, revealing plans for harnessing the technology to enhance its services.
Those plans include the addition of AI-generated tests and quizzes to its Pearson+ subscription service and the use of LLMs to build predictive algorithms providing career recommendations.
During the conference call, CEO Andy Bird said that generative AI was “a significant positive opportunity for Pearson” rather than a threat. But he added that the company had taken legal action to prevent its intellectual property from being used by third parties to train AI models.
“We take great efforts – and will continue to take great efforts – to protect our IP,” he said.
4. Unilever
Since the Covid crisis, Unilever has been no stranger to snarl-ups in the supply chain. When necessary, the consumer goods giant has been using AI to help it source alternative ingredients without affecting the end product. But that’s only one of about 300 uses of AI across the business, whose brands include Ben & Jerry’s, Hellmann’s and Vaseline.
What’s really changed over the past six months is the application of AI into the creative process
In a recent interview with CIO.com, Alessandro Ventura, Unilever’s CIO and vice-president of analytics and business services in North America, spoke about an AI tool called Alex. This manages incoming emails, efficiently filtering out spam and phishing attempts from genuine consumer correspondence. It will then suggest responses for employees to send.
He revealed that another AI application, Homer, uses the GPT API and can generate online product listings that capture the right tone for each brand.
Last year, the company even used AI to develop a limited-edition deodorant, the Lynx AI Body Spray. The tech helped it to analyse 6,000 ingredients and 3.5 million scent combinations.
While that product might seem like a marketing gimmick, Unilever’s aptitude for finding useful AI applications appears to be paying off. The company reported a 10.5% year-on-year gain in underlying sales in Q1 2023.
5. Compass Group
Even companies that don’t appear at first sight to be directly affected by AI have got it on their radars – and for good reason. Take Compass Group, the world’s largest food service provider. It earns a large chunk of its revenue from managing corporate cafeterias through its business and industry (B&I) division.
According to a Morningstar analyst report in May, the Covid lockdowns and the rise of remote working have actually strengthened Compass Group’s position in its market because some smaller rivals have been forced out of business. But, if the adoption of generative AI by its clients reaches such an extent that it slashes the number of employees who need feeding on their premises, that could seriously harm its business.
When asked about the long-term indirect impact of generative AI on the B&I division during the firm’s most recent earnings call, CEO Dominic Blakemore indicated that the business was diversified enough to mitigate the risk. He added that Compass Group was still working out how best to approach AI.
“We’re in considerations and conversations with a number of partners right now to understand how it can improve our own processes,” Blakemore said. “It may create opportunities for roles within the tech sector. It may diminish roles in others.”
The startling advance of generative AI in recent months, embodied by tools such as ChatGPT and Midjourney, has created tremors that are being felt well beyond the hi-tech sector. The technology’s far-reaching implications are forcing firms across the board to consider how they and their industries will be affected, for better or for worse.
Big business certainly isn’t immune to the impact of this transformational tech. Indeed, senior executives from numerous blue-chip firms have discussed the effects of AI in recent weeks, in forums ranging from earnings calls to industry conferences.
Here’s a look at how a small but diverse selection of FTSE 100 companies are approaching the leap forward in generative AI, based on recent public comments by their senior executives.
