AI Costs Spiral as Companies Struggle to Justify Returns
Global corporate AI investment hit US$581.7 billion in 2025, a 130% year-on-year increase, yet executives across major companies report the technology is generating significant waste without clear productivity gains. The mounting costs are forcing HR leaders to take charge of AI governance, workforce planning and spending oversight.
What started as cheap experimentation is becoming an unpredictable expense. Commonwealth Bank chief executive Matt Comyn said companies generate "an enormous amount of volume, noise and waste" through AI. He warned that costs don't scale linearly - spending rises sharply as use spreads across organisations.
Coles chief executive Leah Weckert described the cost-benefit equation as "an emerging issue" as adoption expands. Neither company has reported achieving the productivity improvements that justified initial investment.
Employees Adopt Faster Than Companies Can Manage
Seventy-one percent of Australian AI users now rely on the technology for their jobs or learning, yet adoption remains largely informal and uncontrolled. Around half of users introduced AI tools independently, compared with just 25% directed to do so by leadership.
This disconnect limits enterprise value. Melanie Silva, managing director of Google Australia and New Zealand, said individual usage alone won't deliver organisation-wide transformation.
Across organisations surveyed globally, 88% now use AI in at least one business function, up from 78% in 2024. Fifty-three percent of the global population adopted generative AI within three years - faster than any modern technology.
Productivity Gains Fall Short at Scale
Despite widespread uptake, companies are not seeing expected productivity improvements. Peter Tonagh, executive chairman of Quantium, said most organisations have yet to redesign work to match new capabilities.
Individual workers may become more efficient, but those gains often fail to translate to team performance. "When we roll these tools out to a team, we're not seeing those sorts of productivity uplifts," Tonagh said. The result is operational inefficiency - powerful tools deployed without changing underlying workflows.
Governance and Oversight Lag Behind Adoption
Only about one-third of organisations report governance maturity at level 3 or above (of 4), according to McKinsey's State of AI 2025 and AI Trust Maturity Survey 2026. Fewer than half take concrete steps to mitigate even the risks they rank most serious.
Fifty-five percent of organisations have an AI oversight board or committee, yet gaps remain. Weckert said organisations struggle to track where AI is being used and how decisions are made. She added they are "desperate to find people that can help us to do really great governance of AI."
Employees are doing most work-related AI tasks through personal accounts that employers cannot easily monitor, creating governance, privacy and offboarding risks for HR professionals.
Mental Health and Over-Reliance Emerge as Risks
As AI embeds deeper in work, new risks to employee wellbeing are surfacing. Stephanie McNamara, author of Artificial Intelligence Replacement Dysfunction, said workers face psychological distress from the threat or reality of AI-induced job displacement.
Over-reliance on AI also carries risks. The danger emerges "when AI shifts from being just a tool to help workers do their job to being a substitute for independent thinking," McNamara said.
At the same time, 63% of workers express interest in AI training, underscoring the need for structured workforce planning.
Human Judgment Remains Essential
Rising costs and uneven outcomes are reinforcing the importance of human skills alongside AI deployment. Comyn said the technology increases the need for judgment and oversight, as workers must distinguish meaningful outputs from irrelevant information.
Research suggests potential benefits if AI is managed effectively. Forty-five percent of workers said their roles would be more meaningful if routine tasks were automated. Some sectors could see returns of up to 9.5 times their investment.
Capturing that value depends on aligning spending, governance and workforce design as AI moves deeper into core operations.
For HR leaders tasked with managing these challenges, understanding AI's role in workforce planning and governance is critical. AI for CHROs (Chief Human Resources Officers) provides guidance on aligning AI investment with business outcomes and building effective governance structures. AI for HR Managers covers the practical implementation and workforce analytics needed to address the productivity and oversight gaps emerging across organisations.
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