Looking back to 2025, and contrary to popular belief, most of the layoffs announced by organisations last year - many which were attributed to or perceived as being replaced by AI were actually unrelated to AI adoption.
A recently released report by analyst firm Gartner revealed that while AI may be reshaping the workforce, the layoffs seen in the news were driven by deeper economic shifts.
“While AI-driven layoffs have captured attention, the reality is more complex,” said Kathy Ross, Senior Director Analyst at Gartner’s Customer Service and Support practice. “Most recent workforce reductions were influenced by broader economic conditions rather than automation alone.
In reality, most layoffs in 2025 were not about AI replacing jobs but more about cleaning up after over-hiring, mismanaged costs and funding future tech ambitions.
By 2027, Gartner predicts that half of companies that attributed headcount reduction to AI will rehire staff to perform similar functions, but under different job titles.
As organisations encounter the limits of AI and rising customer expectations, they will need to reinvest in human talent to sustain service quality and growth.
- Kathy Ross, Senior Director, Analyst, Customer Service and Support, Gartner.
While AI played a role in some layoffs, they are not the result of AI successes. Instead, layoffs seem to be part of a broader strategy to reinvest funds in AI, hoping for success down the line.
Will AI truly deliver on its promise to replace human agents?
Workforce layoff announcements are also exacerbating the hype surrounding AI’s promise to replace human agents. As a result, Gartner said in its report that companies are under more pressure from their executive teams to continue with further large workforce reductions.
“The recent surge of workforce layoff announcements, coupled with the hype surrounding AI’s promise to reduce the need for human agents, is creating the perfect storm. You are being urged to consider workforce reductions in the name of efficiency and innovatioN, but before you act, it is essential to separate fact from fiction,” the report advised.
The false narrative and understanding the limits of AI
There is also a false narrative being held that organisations can and should drastically slash their headcount, as they can replace these employees with AI.
By 2027, however, Gartner expects organisations will face up with the limits of AI and rising customer expectations, and half of them planning major AI-driven workforce cuts will eventually abandon those plans as the vision of ‘agentless’ service proves elusive.
On the contrary, and despite speculation that AI will drastically reduce customer service headcount, Gartner’s report found that only a fifth of customer service leaders have actually reduced agent staffing due to AI. The majority report that headcount continues to remain steady, even as they support more customers.
AI simply isn’t mature enough to fully replace the expertise, empathy, and judgment that human agents provide. Relying solely on AI right now is premature and could lead to unintended consequences.
- Emily Potosky, Senior Director, Research, Customer Service and Support, Gartner
Advice on the right workforce reduction strategy to take
Gartner said heads of service and support should push back against the pressure these headlines create by proposing a compelling plan for headcount reduction on their own terms. Gartner suggests an alternative to rapid headcount reduction: making strategic reductions over time guided by data, not hype, is more sustainable.
These thoughtful changes allow organisations to maintain service quality while adapting to new technologies and evolving customer expectations, as well as giving business leaders the flexibility to pivot as situations change.
At the same time, heads of customer service and support should proactively develop and communicate a workforce reduction strategy to your C-Suite, or risk being handed one. To create a compelling workforce reduction strategy, Gartner advises leaders to understand the drivers of recent layoffs and realise why drastic headcount reduction is risky.
“Develop a compelling roadmap - one that may include headcount reduction, but outlines a more realistic, phased approach that accounts for AI’s currently limited capabilities and with and aims to protect the service’s role in the company’s growth” the report advised.
Gartner’s report polled 321 customer service and support leaders in October 2025, and was released earlier this month.
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