Many Companies Regret Replacing Humans with AI
Many companies are now beginning to alter their strategies regarding the implementation of Artificial Intelligence (AI).
After previously reducing their workforce and replacing employees with AI, a number of companies are instead re-hiring staff as they realise that the technology is not yet capable of handling all tasks optimally. This shift in attitude is occurring amidst rising investor concerns regarding the sustainability of the massive AI adoption that has been driving financial markets.
One of the most recent companies to take such a step is the car manufacturer Ford. The company is reported to be re-employing hundreds of experienced engineers to address various product quality issues that automated AI-based systems failed to resolve. “Artificial intelligence is an amazing tool, but its capability is only as good as the information used to train it,” said Charles Poon, Ford’s Vice President of Vehicle Hardware Engineering, as quoted from CNBC International.
Ford is not the only company correcting its recruitment strategy. The Commonwealth Bank of Australia (CBA) and software giant IBM are also refocusing on human labour after facing the limitations of AI. Last year, CBA decided to terminate more than 40 customer service employees and replace them with AI-based voice bots. However, the system was unable to handle all customer needs, which actually led to a surge in incoming calls. This situation ultimately forced CBA to cancel the workforce reduction.
“Making CBA cancel these job cuts is a major victory,” stated an Australian financial sector trade union in a statement. Citing an ABC report from August last year, CBA admitted the company “did not adequately consider all relevant business aspects” when announcing the redundancies. The bank also acknowledged that “we should have conducted a more thorough assessment of the required roles.”
A similar case occurred at IBM. The company replaced a large portion of its Human Resources (HR) functions with AI capable of handling approximately 94% of routine requests. However, the AI failed to resolve the remaining 6% of cases, particularly those involving ethical dilemmas. Consequently, IBM announced plans to triple its entry-level recruitment across all business units in the United States by 2026. “If we do not continue to invest in entry-level recruitment, what will happen in the next three to five years?” said IBM’s Chief Human Resources Officer, Nickle LaMoreaux, at the Charter AI Summit in New York. “There will be no regeneration; the talent pool will truly dry up.”
This phenomenon aligns with the views of several analysts who believe that the strategy of replacing humans entirely with AI is not necessarily the best way to drive business growth. A report from Intuition Labs noted that many companies are too focused on using technology to replace humans without accompanying investments in employee training or upskilling. “Allocating budget to ‘technology to replace humans’ without investing in training or upskilling leaves teams unprepared to utilise AI,” the report stated.
Interestingly, among the companies driving automation, many later regretted the layoffs because they had dismissed the very people needed to oversee the AI. Similar findings emerged in an Orgvue report, where 39% of company leaders admitted to conducting layoffs due to AI implementation. However, within that group, 55% admitted that the decision to terminate employees turned out to be a mistake.
Jessica Zhang, Senior Vice President APAC at HR solutions provider ADP, stated that companies often have to re-engage humans when AI outputs are inconsistent or difficult to implement. “When AI results are inconsistent, inaccurate, or difficult to apply, companies often need to bring back human oversight,” said Zhang. “This can lead to doubled workloads, slower decision-making, and decreased productivity.”
Meanwhile, data from recruitment firm Robert Half sent to CNBC shows that 32% of hiring managers in the United States admitted to eliminating a job position due to AI, but subsequently re-hired people for the same or similar positions. Capitol Technology University concluded that while AI is indeed transforming the world of work, organisations are finding greater value in building collaboration between humans and AI rather than replacing human labour entirely.