IBM's AI Layoffs Backfire as Human Skills Prove Irreplaceable

IBM’s AI Automation: Layoffs Followed by Rehiring

In 2023, IBM cut 8,000 jobs in its human resources department, citing automation as the primary driver. The company introduced an AI system called AskHR to handle routine tasks such as payroll management, vacation requests, and employee documentation. IBM anticipated this shift would streamline operations, reduce costs, and increase productivity.

The results were striking. IBM reported a $3.5 billion productivity boost across more than 70 job roles. But contrary to expectations, the total workforce didn’t shrink permanently. Instead, IBM rehired a similar number of employees, focusing on roles that require human creativity and specialized skills.

A Shift in Hiring Strategy

CEO Arvind Krishna explained that savings from automation were redirected to hiring more skilled workers in software engineering, sales, and marketing. These areas rely heavily on human expertise and creative problem-solving—qualities AI cannot easily replace. The layoffs were not about cutting jobs but about reshaping IBM’s workforce to better suit a future where AI and humans collaborate.

More Jobs Created, Not Lost

This approach flipped the usual narrative about AI and automation reducing job numbers. Instead, IBM’s total employment rose. Krishna told The Wall Street Journal, “Our total employment has actually gone up, because what [AI] does is it gives you more investment to put into other areas.”

Routine tasks were automated, freeing up resources to invest in roles that demand strategic thinking and interpersonal skills. This trend shows that while AI handles repetitive work, the demand for human-centric roles grows.

AI as a Catalyst for New Opportunities

IBM’s experience reflects a broader industry trend. Tech giants like Google and Spotify also leverage AI to automate routine tasks but continue hiring for jobs that require a human touch.

AskHR processed over 11.5 million interactions in 2024 and significantly improved customer satisfaction. The platform’s net promoter score (NPS) jumped from -35 to +74. Still, about 6% of requests required human intervention, highlighting the limits of AI in handling nuanced inquiries.

Balancing Automation with Human Expertise

IBM’s story highlights the importance of balancing AI-driven automation with human roles. AI can increase efficiency and cut costs, but companies must strategically integrate these tools without sacrificing the value of human creativity and interaction.

Krishna emphasized that automation enabled IBM to invest more in areas where people add unique value. The future workforce will likely be a blend of AI handling routine tasks and humans focusing on complex, creative, and interpersonal work.

What HR Professionals Should Take Away

• Automation can free up resources to invest in higher-value roles rather than just cutting jobs.
• AI excels in routine task management but still requires human oversight for complex issues.
• Reshaping workforce strategies to combine AI tools with human skills will be key.
• Investing in employee reskilling and hiring for creative, strategic roles is crucial.

For HR professionals, understanding how AI shifts job functions can help in planning workforce transitions and training programs. To explore practical AI training courses tailored for HR and other fields, visit Complete AI Training.