AI-related workforce cuts are failing to deliver stronger returns on investment, according to analysts, even as technology companies and IT services firms spend billions on AI infrastructure while cutting thousands of jobs to improve profitability.
A recent Gartner survey of 350 business executives at organisations with annual revenue of at least $1 billion found that nearly 80% of companies piloting or deploying autonomous business tools had reduced their workforce. However, job-cut rates were almost identical among organisations reporting strong returns and those reporting modest gains or negative outcomes.
“Many CEOs turn to layoffs to demonstrate quick AI returns; however, this disposition is misplaced,” said Helen Poitevin, VP Analyst at Gartner.
“Workforce reductions may create budget room, but they do not create return. 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.”
The findings come as spending on AI systems rises sharply worldwide. Gartner forecasts spending on AI agent software will grow from $86.4 billion in 2025 to $206.5 billion in 2026, before reaching $376.3 billion in 2027.
At the same time, layoffs across the technology sector continue to rise. Layoffs.fyi estimates that more than 101,550 employees across 120 technology companies have lost their jobs in 2026 alone.
“The data shows layoffs are not a reliable indicator of AI success,” said a lead analyst at a domestic broking firm. “Companies generating better returns are usually the ones investing in workforce adaptation, process redesign and AI integration rather than simply reducing headcount.”
Several major companies have paired large AI investments with workforce restructuring programmes.