What is behind Bill McDermott’s warning
AI adoption in the corporate world is moving at a pace that catches a lot of people off guard, and the ripple effects for those just starting their careers look set to be far more significant than most expected. Bill McDermott, CEO of ServiceNow, brought this discussion front and center during an interview on CNBC’s Squawk on the Street this Friday. In his view, unemployment among college graduates could easily hit the low 30% range in the coming years, as AI agents take over tasks that have historically served as the gateway for young professionals entering the workforce.
In McDermott’s own words, much of the work will be handled by AI agents, making it increasingly difficult for young people to stand out in a corporate environment. It is the kind of statement that makes you stop and rethink what it actually means to prepare for a professional future these days.
Current data already helps explain why this warning is not an exaggeration. According to the Federal Reserve Bank of New York, the unemployment rate among recent graduates in the United States was around 5.7% at the end of 2025. That might seem like a manageable number at first glance, but the picture gets a lot more concerning when you look at the underemployment rate, which hit 42.5% — the highest level since 2020. That means nearly half of employed college graduates are working in jobs that do not even require a degree. In other words, the job market for people fresh out of school was already tight before the most recent wave of automation and AI-driven cuts gained momentum inside major companies.
What McDermott is signaling goes beyond a one-off prediction. He is describing a structural shift in how organizations view their workforce. For decades, entry-level positions served as a natural funnel: companies hired recent graduates to handle operational tasks, and those professionals learned and grew internally over time. With AI agents gaining the ability to tackle those very same activities — from data analysis and report generation to customer service and document screening — the financial incentive to maintain that traditional model shrinks considerably. And when the economic incentive changes, corporate behavior changes right along with it.
Major companies are already cutting jobs because of AI
If you think this is a conversation about some distant future, you need to look at what is happening right now. Across multiple industries, companies are reducing costs and eliminating positions with the help of new AI tools, and the recent examples are pretty concrete.
Last month, Block announced plans to cut nearly half of its workforce in a move directly tied to AI’s ability to automate more internal processes. Meanwhile, Atlassian, the software company whose stock has dropped 54% this year due to fears around AI disruption, announced this week that it will lay off about 10% of its employees to redirect resources and fund AI investments.
These cases are not isolated. They are part of a trend that is picking up steam fast. Unlike previous technological revolutions that mainly impacted manual and industrial jobs, experts point out that AI is eating into white-collar positions — meaning office jobs that traditionally require a college degree. Roles in programming, marketing, financial analysis, and even content creation are among the most affected, allowing companies to reduce hiring and boost productivity with smaller teams.
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Leaders at some of the biggest tech companies in the world are not hiding their intentions. Alex Karp, CEO of Palantir, has publicly told CNBC that he wants to multiply the company’s revenue tenfold while reducing headcount. Andy Jassy, CEO of Amazon, said in June that the company will also shrink its corporate workforce with the use of AI tools. These are statements that leave very little room for interpretation: the shift is clear, and it is accelerating.
How automation is redefining entry-level roles
To understand the real impact of automation on the job market, it helps to look at what is actually happening on the ground. Generative AI tools and autonomous agents can already draft corporate emails, organize spreadsheets, create presentations, conduct market research, and even handle early stages of hiring processes. These are exactly the activities that make up the daily routine of a junior analyst, an administrative assistant, or an intern across a wide range of fields.
When a company realizes it can handle those functions faster, cheaper, and around the clock using artificial intelligence, the decision not to open that entry-level position becomes almost inevitable. The result is that team productivity may go up, but the number of opportunities for people just starting out tends to drop significantly.
ServiceNow itself is a practical example of this phenomenon. McDermott told CNBC that the company’s tools have already eliminated 90% of use cases that previously relied on humans in customer service. On top of that, these solutions allow companies to maintain the same headcount while increasing free cash flow and revenue. In other words, doing more with less is no longer an aspirational goal — it is the operational reality for many organizations.
This phenomenon is not limited to a single industry. Fields like consulting, finance, marketing, legal, and even technology are feeling the effects. Law firms are already using AI to review contracts and conduct legal research, tasks that used to require hours of work from newly minted attorneys. Management consulting firms are adopting platforms that automate data collection and analysis, reducing the need for large teams of junior analysts. In marketing, content generation and campaign analysis tools can accomplish in minutes what used to take days.
AI adoption is spreading across the board, and the most vulnerable positions are precisely those that rely on repetitive, standardized tasks — which, whether by coincidence or not, are the ones most commonly filled by college graduates early in their careers.
The impact on professional development
There is also a less obvious but equally important issue: the impact on professional development itself. If entry-level positions disappear or shrink drastically, how will young professionals gain hands-on experience? College provides theory and fundamentals, but it is in the workplace that people develop skills like real-world problem solving, interpersonal communication, deadline management, and decision making under pressure.
Without that initial learning stage, there is a risk of creating a generational gap where future professionals arrive at senior roles without having gone through the steps that traditionally prepared them for it. That is a cascading effect that goes well beyond unemployment numbers.
Productivity up, opportunities down
One of the most common arguments in favor of AI adoption is the productivity gain. And it is real. Companies implementing AI solutions in their workflows report significant reductions in task completion time, fewer operational errors, and substantial cost savings. ServiceNow, the company McDermott himself leads, is a clear example — its platform helps organizations automate internal processes, and demand for this kind of solution keeps growing.
The problem is that this increase in productivity does not always translate into more jobs. In fact, in many cases, it allows smaller teams to do the same work that previously required larger ones, which naturally reduces the need for new hires.
This dynamic creates a fascinating paradox. Companies become more efficient and competitive, financial results improve, but the job market shrinks for certain profiles. College graduates who invested time and money in their education enter the market and find fewer doors open. Not because they are less qualified, but because the roles that would have absorbed them simply do not exist in the same way anymore.
Automation does not necessarily eliminate work — it redistributes, transforms, and in some cases, concentrates it. Those with experience and advanced skills tend to benefit because AI amplifies their output. But those at the beginning of their journey, without the background to offer something beyond operational tasks, end up in a much more vulnerable position.
The speed of change is what worries people most
Perhaps the most important takeaway from McDermott’s remarks is not the number itself, but the pace. As he emphasized in the interview, this transformation is arriving faster than people anticipate. And when structural changes happen at an accelerated speed, the window for adaptation shrinks for everyone involved — professionals, companies, and educational institutions alike.
Historically, technological transitions in the job market took decades to fully play out. Industrialization, the arrival of personal computers, the rise of the internet — all of these waves brought job losses in some areas and created new roles in others, but the process was gradual enough for society to adjust along the way. With AI, that adjustment window seems to be closing much faster. The tools evolve in cycles of months, not years, and companies that fail to adopt them face competitive disadvantages almost instantly.
This puts enormous pressure on the education system. Universities that still train professionals based on curricula designed for a market in the middle of a major transformation risk handing out diplomas that do not match the skills companies actually need. The disconnect between academic training and market demand is nothing new, but AI is widening that gap at an accelerated pace.
What this means for people entering the workforce
Given this landscape, it makes sense for both educational institutions and professionals in training to start rethinking their strategies. Building familiarity with AI tools, learning to work alongside the technology instead of competing against it, and investing in skills that are still hard to automate — like critical thinking, applied creativity, and emotional intelligence — are paths that grow more relevant every day.
Some competencies that can make a real difference in this new environment include:
- Proficiency with generative AI tools — knowing how to use and integrate these solutions into work processes is becoming a competitive edge
- Strategic thinking — the ability to interpret results, identify patterns, and make data-driven decisions remains an essentially human skill
- Communication and collaboration — interpersonal skills involving negotiation, empathy, and leadership are far harder for AI agents to replicate
- Adaptability — in a market that changes fast, the willingness and ability to learn continuously are worth more than any single technical skill
McDermott’s warning might sound alarming, but it works as an important reminder that the job market is changing quickly, and those who adapt sooner will have a real advantage. The question is not whether AI adoption will transform the careers of college graduates, but how each person will prepare to navigate that transformation. 🚀
