Gartner warns: 30% of workers laid off and replaced by AI will be rehired by 2029, at a higher cost

Companies rushing to replace workers with artificial intelligence may come to regret it and be forced to rehire staff at a higher cost. That is the conclusion of new Gartner research, reported by IT Pro, which attributes these impulsive decisions to a lack of effective workforce planning.

According to Gartner, only 19% of companies say they have practices that help leaders understand how work is changing, assess the impact of AI and align talent strategies with business goals. As a result, the consultancy predicts that by 2029 around 30% of employees laid off and replaced by AI will be rehired, typically at a higher cost to the company.

Caitlyn McDonough, vice president analyst in Gartner's HR practice, argues that many organisations make AI and workforce decisions in the wrong order: they decide how many people to lay off before understanding what it will take to get the work done. In her view, the goal should be to identify which work matters most to the strategy, how it is changing and what the right mix of people and technology is.

Gartner recommends abandoning the "bottom-up" approach, which starts from current roles, skills and headcount and assesses how AI might change them. Instead, it proposes starting with business strategy and then aligning workforce decisions with the work needed to achieve strategic objectives.

The suggested process begins by identifying the workforce capabilities most critical to executing the strategy and forecasting work demand and capacity requirements. Next, organisations should assess future workforce supply, both human and AI-enabled, quantify the gaps, evaluate solutions by cost, risk and speed, and establish governance processes to prioritise and fund workforce investments. McDonough sums up the idea: stop planning for the workforce you have and start planning for the one your strategy demands.

The report adds to earlier studies. According to the article, Forrester research from a year ago found that 55% of companies that cut staff in favour of automation came to regret it, and months earlier another report revealed that more than a third of UK business leaders regretted cutting staff because of AI. Forrester also warned that rehiring does not always mean bringing back those laid off: more and more companies are offshoring roles to avoid paying higher rates.

The article cites specific cases. This summer, Ford reportedly began rehiring hundreds of experienced engineers to fix quality problems that AI could not handle. Meanwhile, the Commonwealth Bank of Australia replaced more than 40 customer service employees with an AI chatbot, found it was not up to the task and reversed the cuts.

Finally, the piece notes that AI-attributed layoffs have been a recurring theme over the past two years, with companies justifying them on the grounds of technological advances and cost savings. However, an Oxford Economics study suggests these claims are often a smokescreen: some companies are allegedly using AI as an excuse to mask weak demand, poor financial results or overhiring. According to the researchers, some firms try to present layoffs as good news rather than bad, for example by concealing past overhiring.