IBM laid off 8,000 employees to replace them with AI—what they didn’t expect was having to rehire as many due to AI
In 2023, IBM made headlines with the announcement of nearly 8,000 layoffs, primarily from support roles such as Human Resources. The goal? To replace these workers with artificial intelligence (AI), automating repetitive tasks and increasing efficiency. However, just months later, the company found itself doing something it hadn’t anticipated: rehiring many of those workers.
IBM’s AI Experimentation: The Plan to Cut Costs
IBM’s announcement to reduce its workforce was bold. As a longtime technology pioneer, the company believed that up to 30% of repetitive tasks in HR and other support functions could be automated with AI. The aim was clear: boost productivity and reduce costs. This move came amid a wider trend in the tech industry, with companies like Google and Spotify also trimming staff, often citing AI and automation as key drivers of these cuts.
https://www.youtube.com/watch?v=VHbZ7qHFmR4?si=5tWwg7PbzQ_o1hiJ
However, IBM took this plan a step further. The company developed “AskHR,” an AI-driven chatbot designed to handle up to 94% of HR-related tasks. From processing leave requests to managing payroll and employee documentation, AskHR was a game-changer, freeing up employees to focus on more valuable tasks. By automating these processes, IBM saved an impressive $3.5 billion across 70 different roles, demonstrating the efficiency gains AI could provide.
The Unexpected Result: Rehiring and Redirection
But here’s the twist: despite these significant savings, IBM’s workforce actually grew after the layoffs. Arvind Krishna, the CEO, explained to the Wall Street Journal that while AI had helped streamline operations, it also allowed the company to reinvest in other areas. Rather than eliminating jobs permanently, IBM found that the freed-up resources were being directed towards higher-value roles.
IBM began hiring engineers, salespeople, and marketing specialists—positions that require creativity, critical thinking, and human interaction—skills that AI cannot replace. While AI took over routine, repetitive tasks, the demand for human talent in strategic, high-impact areas grew substantially.
