More than half of businesses made incorrect decisions when cutting jobs after deploying artificial intelligence technologies, according to new research released Tuesday.
The annual survey by organizational design software company Orgvue found 39 per cent of business leaders have made employees redundant after adopting AI, with 55 per cent of those executives now admitting they made the wrong calls.
“Businesses are learning the hard way that replacing people with AI without fully understanding the impact on their workforce can go badly wrong,” said Oliver Shaw, CEO of Orgvue.
The research, which polled 1,163 C-suite and senior executives at medium and large organizations across eight countries, reveals growing caution about AI’s role in workforce transformation compared to last year’s findings.
Skills development becomes priority
Despite fewer leaders expressing concern that AI will replace human workers (48 per cent compared to 54 per cent in 2024), many organizations are pivoting toward skills development rather than replacement.
Eighty per cent of business leaders plan to reskill employees to use AI effectively in the workplace, while 41 per cent report increasing their learning and development budgets to ensure proper training.
The findings highlight a critical skills gap, with 35 per cent of organizations acknowledging a lack of AI expertise as a major barrier to successful implementation.
“We’re facing the worst global skills shortage in a generation and dismissing employees without a clear plan for workforce transformation is reckless,” Shaw said.
Implementation challenges persist
Despite continued optimism about AI’s transformative potential, many organizations still struggle with practical implementation. One quarter of leaders admit they don’t know which roles would benefit most from AI, while 30 per cent cannot identify positions at risk from automation.
This uncertainty has led 43 per cent of companies to work with external AI specialists to help prepare their workforce, an increase of six per cent from last year.
The research also highlights growing concerns about uncontrolled AI use, with 47 per cent of executives worried about employees using AI without proper safeguards. In response, 51 per cent report introducing internal policies to govern AI usage.
Investment continues despite uncertainty
Despite implementation challenges, AI investment remains robust. Of businesses that invested in AI last year, 80 per cent plan to increase their spending in 2025.
However, the research exposes a disconnect between confidence and readiness. While 76 per cent of business leaders believe their organization will be taking full advantage of AI by year’s end, 27 per cent acknowledge they lack a clearly defined AI roadmap, and 38 per cent still don’t understand how AI will impact their business.
“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,” Shaw said. “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.”
