Australian companies face 'AI washing' claims after wave of job cuts, offshoring

By Renju Jose and Christine Chen

SYDNEY, Nov 12 (Reuters) - Australia's blue-chip companies are increasingly invoking artificial intelligence as they cut jobs and move work offshore, unions and experts say, complicating the government's efforts to support employment in a slowing economy.

On Tuesday, Qantas QAN.AX, Australia's flag carrier, said it would cut 850 jobs and outsource some corporate functions offshore as part of an AI-driven overhaul with consulting firm Accenture, a move that has raised accusations of "AI washing."

"AI washing" describes a practice by companies of attributing layoffs to AI tools when the primary driver may be broader cost-cutting measures, such as shifting jobs offshore.

Tech companies WiseTech WTC.AX and Atlassian TEAM.O have cut jobs this year, attributing the losses to AI. Telecommunications firm Telstra TLS.AX has also cut jobs from an AI joint venture with Accenture, with some work offshored to India.

More broadly, other firms across corporate Australia have also slashed their domestic headcounts while expanding operations in India, the Philippines and Vietnam, though they did not explicitly mention AI in their announcements.

When asked about the Qantas job cuts, Prime Minister Anthony Albanese, who was unveiling the response to a recent breach of a government website by an OpenAI agent, said AI "represents an enormous opportunity and a major economic issue."

Labour unions have argued that Australian workers were not being replaced by AI, but by lower-paid offshore employees.

"Unions are concerned about the risk of companies using AI simply as a cover to cut Australian jobs with no accountability," said Australian Council of Trade Unions Secretary Melissa Donnelly.

"From Qantas to the big banks, workers deserve transparency and genuine consultation over decisions that impact their jobs and lives."

The Australian Services Union, which represents the affected Qantas workers, accused the airline of "using AI to launder their cuts to Australian jobs."

"We expect to see more of this cost cutting and race to the bottom if corporate Australia continues to copy this failed tactic," said Assistant National Secretary Scott Cowen.

Senator Barbara Pocock, a member of the Australian Greens party, said on Wednesday that she was concerned to see big companies engaging in "AI washing," using the technology as an excuse to cut jobs.

"AI is transforming our workplaces and economy but that's no excuse to let it run rampant," Pocock said in a statement.

A Qantas spokesperson said in a statement it would continue to consult with unions and that it was focused on "redeployment opportunities" and support for impacted staff. Qantas did not respond to the concerns around 'AI washing'.

Atlassian, WiseTech and Telstra did not immediately respond to requests for comment.

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Further job cuts by companies could pose headaches for Australia's centre-left Labor government, with recent polls showing its approval ratings steadily falling amid high cost-of-living pressures.

The central bank has raised interest rates five times so far this year to their highest level in 18 years amid persistent inflation, while the latest data showed the unemployment rate at a five-year high of 4.7%.

Uri Gal, a professor at the University of Sydney Business School, said a growing number of companies were blaming job cuts on AI, but "we should therefore be cautious about accepting AI as the primary explanation."

"There are real incentives to engage in AI washing," he said. "A company that announces job cuts to reduce costs may face criticism, whereas one that presents the same decision as part of an AI transformation can appear innovative and forward-looking."

Gal said the Qantas decision appeared to be due to conventional outsourcing and demonstrated how AI can help justify restructuring before the technology's productivity gains have materialised.

"The company has announced that some corporate functions will be transferred to Accenture, primarily in India, and explicitly states that these functions will subsequently be transformed through AI and automation," Gal said. "This raises an obvious question: if AI is making these jobs redundant, why does the work first need to be transferred to another group of employees?"

The Reserve Bank of Australia said this week AI had not yet led to widespread job losses, though it noted "tentative signs of adjustment," with job ads weakening in AI-exposed occupations and employment growing more strongly in less affected roles.

A government spokesperson said in a statement it expected Australian workers to see the benefits of new technologies and that employers should invest in upskilling them to adopt AI.