AI Interrogator: Generative AI’s Impact on Europe with Ann-Kathrin Sauthoff-Bloch

Kate: Hello and welcome to this episode of the Infosys Knowledge Institute's podcast on all things AI, The AI Interrogator. I'm Kate Bevan of the Infosys Knowledge Institute, and my guest today is Ann-Kathrin Sauthoff, who is an Infosys colleague of mine. She's the managing director of Infosys Consulting in Germany. Ann-Kathrin, thank you so much for doing this. I really appreciate you coming on the podcast.

Ann-Kathrin: Thanks very much, Kate, for having me. Great pleasure.

Kate: What I wanted to talk about today is our Generative AI Radar, which we've just released, looking at generative AI, how it's getting traction in the Europe area and companies in Europe and companies in Europe. Particularly interest-ed obviously in your experience in Germany. One of the things we've seen from the Radar is that, in general, busi-nesses in Europe are working with AI both with confidence but also with some caution, which we think is a lot to do with GDPR and the regulatory regime in Europe. We found some interesting variations in different countries, and German firms are really among the leaders we find in generative AI spending in our research. Does that chime with what you and your colleagues have been seeing?

Ann-Kathrin: Yes, absolutely. It's slightly disappointing when I looked at the Radar that Europe is still quite far behind in terms of the investment when you compare it to the US. As you rightly said, this is I think pretty much down to sort of being quite an overregulated region by the EU, but also by country laws. That's not just GDPR, it's all other things as well. I think companies in general are quite cautious on exposing themselves to any sort of risk because the return might just be really bad for them.

Kate: What kind of bad return are you thinking of? Are you thinking of the risks of fines or falling foul of the whole regula-tory regime?

Ann-Kathrin: Well, they might just get really bad press if they come into sort of the area of not using customer data properly or exposing things to the public which they shouldn't. This is, I think, one of the main reasons that is hindering them from adapting to it. I'm actually quite happy that Germany is a bit at the forefront compared to the other European countries, although it's still lagging behind the US. I think especially the large companies are seeing the advantage and are taking very good diligent care on how to apply AI to their business models and where to use it and make sure that they're also compliant with all the regulations around it, which I think is a challenge in itself.

I mean the Radar has shown that companies really involve their top management into decisions on how to use gen-erative AI. It just shows you that, a, yes, the opportunity is seen as advancing the business, being a great engine for growth, helping on the labor shortage that we clearly have in this region, but also on the other hand, to make sure that all the regulatory aspects are well covered and that top management is actually informed about it and that they are taking a very conscious decision on where to use generative AI in order to see the risk in advance and well evalu-ate it.

Kate: Yeah, it's one of the things we were really struck by was the difference in caution between North American compa-nies and in Europe, so wanted to come back to the point you just made about the labor shortage. I don't think we considered that particularly closely when we were looking at it. I think it's a really interesting point. How do you think generative AI is going to help with the labor shortage?

Ann-Kathrin: If you look at the German labor market at the moment, it's like everybody's craving for talent. Yeah? Be it in quite low profile jobs, but also in the high academia type of jobs. I think AI is probably not solving everything, but it can definitely help in getting some of these jobs covered in the future by AI models where you have repetitive jobs or things where you just need to do basic analysis and so on, so that can really help.

I think some people feel scared by it because they say like, "Oh, this is eradicating so many jobs and they're all going away and the world is coming to an end." Well, I don't think it is because if you use it wisely, it's actually a great ad-vantage that you have. Companies should take advantage of it and take very conscious decision on where to apply AI or generative AI and use that to address the skills shortage that everybody is facing.

Kate: Are you confident that we are going to have the skills we need specifically for generative AI in Europe?

Ann-Kathrin: No, we don't really have the right skills, but I think people, if they bring the right openness of mind, they can learn it. Especially the larger companies can put in training programs in place for their people to, a, make them aware of what generative AI as just one technology can bring in terms of advantages and infuse that into their internal innovation processes, but it's also for digital technology, automation technology. I mean you name it, right? People need to be open for it, and I think companies need to invest in training of their employees to make sure that the workforce can actually develop itself plus the company in the pace of the technology advancements.

Kate: Yes. Also, I think developing your own in-house talent reassures people that AIs are going to come along and just kill everybody's jobs, right?

Ann-Kathrin: Absolutely. Absolutely. Yeah. I think that's also something... I mean there's this German angst. Here, it's a lot about job security in this market. I think giving that reassurance is good, but also that is changing in the market, I have to say. Yeah? I mean 20 years ago people were still about lifelong employment, and I think we've come over that point here.

Kate: Yes, very much so. Same here in the UK. One thing that struck us when we were looking at the report and looking more broadly at Europe, it seemed like the regulatory framework in Europe is very much at the heart of the ap-proach to generative AI. You've touched on that. We think that the firms here in Europe are very much more mature in how they handle data, very alert to the regulatory issues. Is that a good thing?

Ann-Kathrin: I mean, overall, my opinion is that Europe is too regulated when it comes to anything you want to do in business. Actually that is hindering growth for the region because I mean, at the moment, when you're a large company, I mean you have entire departments just dealing with regulations, filing and reports, tracking stuff. I think that's good, but I think we have reached a limit now where we really need to reconsider whether that's the right way. Because if you look at the moment where are startups founded, many of them are founded in the US or in other regions be-cause it's actually quite hard to do that in Europe because of all of the regulations going on. Right? Or you have com-panies in Europe that are investing in innovations.

I just talked to a medical device company and they said, "We're based here out of Germany," but they will first launch their product in the US because it's easier to get the market access there, to navigate all the regulations there. That tells you that our regulation is going a bit overboard and is actually hindering growth. I'm actually a bit concerned that in the generative AI space, if we're also going overboard, it will hinder us from being part of that wave and really taking advantage of that.

It would be lovely if a lot of startups come from Europe and we are creating a community here, and also larger com-panies are taking advantage of it, and it's really fostering growth. If regulation is really keeping you very tight, it's not going to happen, yeah? I think now with all the new regulations coming up, I hope that the intelligent people who are dealing with that take that into account and are not going overboard, because in the US the approach is a bit more relaxed around GDPR. GDPR just being one of many examples for regulation, but I think we really need to have a careful eye on that.

Kate: Yeah. One thing that struck me though when thinking about the regulatory things, at least in Europe, we have a united... It's one regime right across the whole of the EU. I mean the UK is slightly separate of course, because we're no longer part of the EU. Does that help encourage people that at least they only have to deal with it once rather than a fragmented way? In the US they've got federal and then local state laws. Do you think there's an advantage in the European approach to regulation like that?

Ann-Kathrin: Yes, I think there is. I hope it stays like that. On the other hand, if you look at the European Union as one sort of area of economy, it's not as large as the US. I mean we need to reunite there and sort of make things equal across the region, because I think we will go down into chaos if every country now would start their own regulation like it used to be years ago before the EU was founded. I think that is actually quite an advantage. I just think that generative AI is such a great opportunity at the moment for each country, I think it would be really sad if we would miss that op-portunity in Europe by sort of overregulating it. That's really my true belief in this. Yeah.

Kate: So more broadly, this is a transformative technology. What do you think it's going to mean for society? How can we adapt to this technology?

Ann-Kathrin: I think we need to embed it into everything we do. I truly believe... I mean there are a lot of people who just see the negativity about it, as we previously discussed, eradicating jobs and so on. I think there is so much beauty in generative AI as one of the leading technologies at the moment. If we embed it in everything we do, we are in an aging society. Right? I mean we have the skill shortage as we discussed and so on.

I think we should see it as a motive for growth, something that we really should leverage in every aspect we can do. Of course, within ethical limits, as you rightly said, right? Not going overboard with data privacy, because I mean we don't want to be a transparent glass to everyone in terms of who we are as a person. I think that's fair. Even if you implement some of these limits, I think we can take great advantage of generative AI as just one of the leading technologies and help Europe to grow and come back to previous heights. Yeah.

Kate: So other than regulation, what do you think the other challenges are for Europe with generative AI? I mean I'm thinking about things like is the data ready? Have we got the data in a good position for it?

Ann-Kathrin: I think we probably have. I mean the good thing about generative AI is it actually does not need to have a lot of structured data beneath it. Right? It can draw on unstructured data, so you can throw in quite a few things. I would actually think that this is more of an advantage now that when you start with these models to work, that companies don't be too organized. I think they just need to take conscious decisions on what data are they exposing to genera-tive AI in order to generate proper results?

This needs a new governance, of course, and sort of conscious decisions to be taken. As we said, I mean board members are involved in this so it has the highest attention in the company you can potentially think of. I think that's, yes, we are ready. Right? I think we just need sometimes be more creative and imaginative on how we can actually use it in different business models, but I would say that Europe is pretty ready.

Kate: That's actually very good to hear, but I'm going to ask you my final question. I ask everybody this. Do you think AI is going to kill us all?

Ann-Kathrin: I hope not. I mean it's like with every technology that is coming out. I mean, first of all, people are saying like, "Oh my God, the world is coming to an end." I remember that when the blockchain came out. It was also, Bitcoin's going to kill us and all these things. It hasn't happened. It's not going to happen. I think the same applies to generative AI. I mean, of course, you can use any technology in a good way, in a bad way, right? It's like a lot of the technology inno-vations over the past hundred years.

You can use them for the greater good or you can use them for going to war. For this, of course, you need to have some sort of regulation in order to channel the innovation in a positive way so that people cannot go overboard. I personally do believe that people are sensible and are taking good decisions, be it on an individual level, on a corpo-rate level, but also I trust in our government that they build a framework around it that is something we can well live with and manage with. I'm actually very positive about our future, and I hope we see more technology innovations coming out.

Kate: That's encouraging to hear. I must say I'm encouraged by the amount of work I see being done around making sure we're getting out in front of this. I feel like with some other technologies, we didn't get out in front of it. We were regulating from behind and playing catch up. It certainly feels to me that we can be a bit more optimistic about where we're going with generative AI.

Ann-Kathrin: Yeah, absolutely. Fully agree.

Kate: Well, I think that's a great place to finish it. Ann-Kathrin, thank you very much for joining us today. It's been great to have you.

Ann-Kathrin: Yeah, thanks very much, Kate. It was very exciting discussion, so thank you very much for having me.

Kate: That was part of the Infosys Knowledge Institute's AI podcast series, The AI Interrogator. Be sure to follow us wher-ever you get your podcast and visit us on infosys.com/IKI. Podcast was produced by Yulia De Bari, Catherine Bur-dette, and Christine Calhoun. Dode Bigley is our audio engineer. I'm Kate Bevan of the Infosys Knowledge Institute. Keep learning, keep sharing.