"Workforce reductions may create budget room, but they do not create return"
Laying off employees due to AI adoption is not translating into a return on investment (ROI) for many organisations, as workforce cuts are tagged as a "misplaced" move from CEOs.
This is according to a new report from Gartner, which found that approximately 80% of organisations that piloted or deployed autonomous business capabilities have carried out workforce reductions.
Despite the move, the report found that firms reporting higher ROI from autonomous technologies and those experiencing only modest gains or negative outcomes have nearly equal workforce reduction rates.
"Many CEOs turn to layoffs to demonstrate quick AI returns; however, this disposition is misplaced," said Helen Poitevin, distinguished VP analyst at Gartner, in a statement. "Workforce reductions may create budget room, but they do not create return."
The poll confirms the precautions issued by various experts on the risk of reducing headcount because of AI adoption, where they warned that getting ahead of what AI can deliver may not create may not create efficiencies.
"Be careful about anticipating benefits from AI with headcount reductions or hiring freezes before AI capabilities are actually in production," they warned.
"Getting ahead of what AI can actually deliver today creates risk, not efficiency."
What improves ROI?
Meanwhile, Gartner found that organisations that upskill their employees are more likely to generate ROI.
"Organisations 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," Poitevin said.
In fact, the report found that, in the long term, autonomous business will create more work for humans rather than reduce it.
Autonomous business refers to the era in business that is powered by rapid advancements in AI, according to Gartner. It represents the "next significant wave of transformation following digital business."
It predicts that autonomous business will be a net-positive job creator between 2028 and 2029.
"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," Poitevin added.
