More than a third of UK tech leaders admit they’ve cut staff in favor of AI – but now they regret making hasty redundancies

With the threat of AI-related job losses growing, a significant portion of tech leaders fear they may have created longer-term problems by cutting staff in favor of the technology, new research shows.

Analysis from Orgvue found that 39% of business leaders in the UK made employees redundant as a result of AI adoption last year, but of those more than half (55%) admit they acted too hastily.

The study, which surveyed 1,000 C-suite and senior decision makers at medium and large organizations, highlights the rash approach to AI adoption at many enterprises, according to Orgvue CEO Oliver Shaw.

“While 2024 was the year of investment and optimism, businesses are learning the hard way that replacing people with AI without fully understanding the impact on their workforce can go badly wrong,” he said.

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“We’re facing the worst global skills shortage in a generation and dismissing employees without a clear plan for workforce transformation is reckless. Some leaders are waking up to the fact that partnership between people and machines requires an intentional upskilling program if they’re to see the productivity gains that AI promises.”

Notably, concerns over skills shortages have prompted a sharpened focus on staff training and upskilling, the study found.

Some 80% of business leaders said they plan to reskill employees to use AI in the workplace, for example, while 41% have increased budgets to ramp up AI training schemes and opportunities for staff.

Bolstering internal AI skills has rapidly become a strategic imperative for many tech leaders, according to Orgvue. More than one-third (35%) of respondents said a lack of expertise in this domain is one of their biggest challenges moving forward.

Yet despite a razor sharp focus on AI adoption, many still struggle with how to measure success and identify clear use-cases. One-in-four don’t know which roles can benefit the most from AI, for example, while 30% don’t know which roles are at most risk from automation.

To gain a clearer understanding of the long-term impact, nearly half (43%) said they are working with third-party organizations to prepare their workforces. This, Orgvue noted, marks a 6% increase compared to the year prior.

Orgvue noted that while tech leaders reported regret over “questionable redundancy decisions”, this doesn’t mean workers remain safe moving forward.

Business leaders admitted they feel “less responsible” to protect their workforce from redundancies, the study warned, with 62% highlighting their responsibility in this regard compared to 70% in the year prior.

AI still remains a key focus for enterprises

Despite bumps on the road so far, tech leaders polled by Orgvue said they remain upbeat about the potential of AI in the long run. Nearly three-quarters (72%) of leaders told the firm that AI will be the “dominant driver” of workforce transformation in the next three years.

It’s this optimism that is fueling further investment in the technology. Four-in-five (80%) of businesses that invested in 2024 set to ramp up investment in 2025, for example.

Similarly, 76% of business leaders said they’re confident that their enterprise will be “taking full advantage of AI” by the end of 2025.

“As in 2024, businesses remain confident that AI will solve their biggest business challenges and will define how they structure their organization and workforce in the future,” Shaw said. “But our research suggests this confidence could be misplaced.”

“While it’s encouraging to see investment in AI continue to grow, businesses need a better understanding of how the technology will change their workforce in the coming months and years.

"Questions remain unanswered over whether AI will yield enough return on investment in the near term to justify the costs associated with lost talent and downturn in productivity.”

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