Layoffs won’t fix AI ROI problem, warns Gartner

Cutting jobs to justify artificial intelligence investments is proving to be a flawed strategy for many organisations, with new research showing that layoffs linked to AI adoption are not translating into improved returns.

A survey by Gartner found that nearly 80% of organisations piloting or deploying autonomous business capabilities have reduced their workforce. However, these reductions appear to have little bearing on financial performance. Companies reporting strong returns from AI initiatives showed nearly identical layoff rates to those seeing modest or even negative outcomes.

“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.”

The findings reinforce growing caution among industry experts, who have warned against prematurely tying AI adoption to headcount cuts. According to analysts, organisations that move ahead of what AI can realistically deliver risk undermining efficiency rather than improving it.

“Be careful about anticipating benefits from AI with headcount reductions or hiring freezes before AI capabilities are actually in production,” experts cautioned, noting that overestimating AI’s current capabilities can introduce operational risks.

Instead, the report points to a different path to returns: investing in people. Companies that prioritise upskilling, redesign roles, and build operating models where humans guide and scale autonomous systems are more likely to see tangible ROI.

“Organisations that improve ROI are not those that eliminate the need for people, but those that amplify them,” Poitevin said.

The study, based on a survey of 350 global executives from organisations with at least $1 billion in annual revenue, highlights a broader shift toward what Gartner calls “autonomous business”, an emerging model powered by AI agents, intelligent automation, robotic process automation, digital twins and tokenised assets.

Rather than replacing humans, this model is expected to reshape work. Gartner predicts that autonomous business will ultimately generate more jobs than it displaces, becoming a net-positive job creator between 2028 and 2029.

“Long term, autonomous business will create more work for humans, not less,” Poitevin added, pointing to structural factors such as demographic decline and the need for human oversight in trust-sensitive decisions.

As AI investments accelerate, with spending on AI agent software projected to surge sharply over the next two years, it translates that cutting costs through layoffs may free up budgets, but sustainable returns will depend on how effectively organisations combine human capability with machine intelligence.