This tech giant says A.I. has already helped it save $1 billion

For employers embracing artificial intelligence, it’s not about the bottom line—but it’s not not about that, either.

Companies are increasingly using robots and other machine-learning technology to recruit, hire, assess, and manage their staff, as I report in a feature that’s part of Fortune’s February special report on artificial intelligence. Most of the employers and vendors I spoke with for that article told me they were automating some human resources functions because it saves them time, and because some A.I. technology can help them hire a more diverse workforce. Efficiency and greater diversity were also the top reasons cited by recruiters and hiring managers LinkedIn surveyed in 2018; meanwhile, only 30% of those surveyed said they were using artificial intelligence because it “saves money.”

Still, “efficiency” and “cost-cutting” are usually synonyms in corporate-speak — as several human resources executives acknowledged to me. “We haven’t really focused on the cost-saving element, but there is a financial component to filling jobs faster,” says Rupert Bader, senior director of people analytics for Expedia Group, which is using A.I. -enabled technology from startup Textio to recruit employees.

Using machine-learning technology in human resources can help companies cut costs by hundreds of millions of dollars, or more, in some cases. IBM, for example, estimates that it has realized “almost $1 billion in savings” since 2011 by integrating artificial intelligence and other modernization efforts in its HR department, according to global head of talent Obed Louissaint.

The technology giant has more than 350,000 employees, and receives up to 10,000 job applications every day. Machine learning helps IBM sort through the applicant deluge for the best matches, Louissaint explains: “Trying to find a needle in the haystack becomes a little easier when you have a magnet.”

IBM also has created A.I. -enabled systems that help its human managers handle employee training, performance reviews, and even compensation and retention conversations. The company has created what it compares to a Netflix for employee development, an internal program that tracks a worker’s skill set and recommends classes or training sessions to advance their professional learning. (Topics can range from leadership-focused sessions on public speaking or negotiation to more technical instruction on how to build chatbots or other types of programs.)

And then there’s what IBM calls its “proactive retention” program, which guesses when an employee is getting ready to quit—and alerts managers that now might be a great time to offer a raise, a promotion, or another incentive to keep someone around. Louissaint estimates that IBM has saved about $300 million in hiring-related and lost-productivity costs since implementing that technology in 2011.

Some of the other $700 million in savings that IBM has realized in human resources result from other modernization efforts, including developing in-house technology to replace a third-party employee-development platform. That shift eliminated the licensing fees it paid externally. IBM also says it has reduced the overall expenses of its human resources department by 30%, in part by automating some of its lower-level “data verification and reconciliation” work in the department, according to a company spokeswoman. She adds that the company has reassigned its remaining HR staffers to more sophisticated tasks.  

Louissaint was careful to emphasize that IBM still plans to keep humans involved in managing its workforce. Artificial intelligence can provide “an insight or an input, but the manager then makes the ultimate decision,” he says, adding that employees “want a human who knows them behind the decision—versus thinking that they’re being managed by machine.”

Clarification: This article has been updated to more clearly describe how IBM has saved money in its human-resources department.

More from Fortune’s special report on A.I.:

—Inside big tech’s quest for human-level A.I.
—A.I. breakthroughs in natural-language processing are big for business
—A.I. in China: TikTok is just the beginning
—A.I. is transforming HR departments. Is that a good thing?
—Medicine by machine: Is A.I. the cure for the world’s ailing drug industry?
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