Companies gutted their teams to free up cash for AI, betting the machines would pay it back. The ones that cut deep ended up with the same returns as the ones that kept their people.
Compaies that laid people off to fund AI saw essentially the same financial returns as those that didn’t, according to a Gartner survey of 350 executives at companies pulling in at least $1 billion a year.
Roughly 80% of them reported cutting staff tied to rolling out AI and automation, in some cases by as much as 20%. When Gartner compared the results, the reduction rates were nearly identical whether the company saw strong returns, modest gains, or negative outcomes. The deepest cutters didn’t outperform the lightest ones.
“Many CEOs turn to layoffs to demonstrate quick AI returns; however, this disposition is misplaced,” said Helen Poitevin, a distinguished VP analyst at Gartner. “Workforce reductions may create budget room, but they do not create return.”
The companies actually improving their numbers were the ones investing more in people, not fewer, adding new roles and skills so humans could guide the systems. And the bet the cutters were funding was shaky to begin with. An MIT report found that despite $30 to $40 billion in enterprise spending, 95% of organizations got zero measurable return from their GenAI pilots.
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