‘We Acted Too Quickly’: Over Half of Companies Regret AI-Driven Layoffs, Report Finds

Many business leaders who downsized their workforce in response to AI adoption now believe they acted too quickly.

A new report from Orgvue reveals that, while 39% of companies laid off staff due to automation, 55% of those now regret the decision. Confidence in AI’s ability to replace human workers also appears to be waning, with only 48% of leaders expecting job displacement, down from 54% last year.

More findings from the Orgvue report

• 62% of executives say they feel responsible for shielding employees from AI-driven redundancies, a notable drop from 70% last year.
• 34% of the leaders reported that employees have voluntarily left their jobs as a direct result of AI’s implementation.
• One of business leaders’ biggest fears is that employees are using AI without proper controls (47%). This is motivating 80% of business leaders to reskill employees to use AI effectively.
• 51% said they are introducing internal policies so that employees will understand how AI should be used in the workplace. And 51% of leaders believe reskilling is strategically important in preparing their workforce for AI.
• To ensure employees have the right training, 41% said they have increased their L&D budgets.

A startup case in point: Klarna’s AI reversal

The findings in Orgvue’s report reflect a broader shift happening across industries. One prominent example is financial technology company Klarna. Beginning in 2022, Klarna replaced about 700 customer service employees with AI tools as part of a push to automate both marketing and support operations. The move was driven largely by the need to cut costs.

However, the company has since admitted that this automation-first approach didn’t deliver the customer experience it had hoped. “From a brand perspective, a company perspective, I just think it’s so critical that you are clear to your customer that there will always be a human if you want,” the Swedish fintech’s CEO Sebastian Siemiatkowski told Bloomberg.

Siemiatkowski said the use of AI agents without human support is no longer the right fit for Klarna.