Enterprises keep cutting staff for AI — and they keep regretting it

Eight-in-ten companies using automation tools are cutting staff numbers, but even with layoffs they're not necessarily seeing any return on investment (ROI).

That's according to new research by Gartner, which surveyed 350 companies with at least $1 billion in annual revenue that had rolled out or were piloting autonomous business capabilities – be it AI agents, intelligent automation, or robotic process automation (RPA).

The poll found 80% of those using autonomous tools had cut staff, but weren’t unlocking the level of returns they were expecting.

"Many CEOs turn to layoffs to demonstrate quick AI returns; however, this disposition is misplaced," said Helen Poitevin, Distinguished VP Analyst at Gartner. "Workforce reductions may create budget room, but they do not create return."

"Organizations that improve ROI are not those that eliminate the need for people, but those that amplify them by aggressively investing more in skills, roles and operating models that allow humans to guide and scale autonomous systems."

Despite AI and other forms of automation not delivering any ROI as yet, Gartner still forecasts that spending will increase for AI agents.

The consultancy predicted that AI agent spending would more than double from $86.4bn in 2025 to $206.6bn this year, continuing to climb to $376.3bn next year.

Similarly, despite the vast majority of polled companies saying they were cutting back on their workforce, Gartner also predicted that autonomy would increase the need for people.

By 2028, the consultancy predicts that autonomous business tools would be a "net-positive job creator" thanks to the creation of "new forms of work that AI cannot absorb."

"Long term, autonomous business will create more work for humans, not less. Lasting structural factors such as demographic decline and high-stakes, trust-dependent consumer moments will ensure human talent remains central to running, governing and scaling autonomous business," said Poitevin.

That echoes a previous Gartner report that last year predicted AI won't create a "jobs apocalypse" but there would be disruption as 32 million jobs a year will need to be "reconfigured, redesigned or fused."

Executive regrets are mounting

The research from Gartner tracks with a series of studies over the last 18 months highlighting a rash approach to AI and automation – and one that many businesses have come to regret.

A survey of UK tech leaders last year showed a third had cut staff in favour of AI, but later regretted making those redundancies. Separate research from Forrester suggested that the trend of AI-related layoffs could eventually result in a wave of offshoring, with enterprises that have cut staff trying to claw back talent.

Leading figures in the tech industry, including those in the AI space, have also hit out at the current trend of layoffs. Earlier this year, OpenAI CEO Sam Altman suggested that companies engaging in these practices are “AI washing” and blaming the technology for cuts caused by other factors.

Altman’s comments were backed up by an Oxford Economics study that said claims of AI disrupting work had “patchy” evidence at best.

"While a rising number of firms are pinning job losses on AI, other more traditional drivers of job layoffs are far more commonly cited,” the report stated. “What's more, we suspect some firms are trying to dress up layoffs as a good news story rather than bad news, such as past over-hiring."

Plenty of job losses attributed to AI aren't because the technology can do their jobs, but instead redundancies are being used to pay for the initial investment in AI with the hope it pays off in the end.

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