Despite Anthropic CEO Dario Amodei predicting AI will disrupt or eliminate half of entry level roles and OpenAI CEO Sam Altman foretelling the demise of customer service jobs, staffing cuts caused by AI efficiencies are not as widespread as one would expect.
“What we have figured out is that most of the layoffs in 2025 were unrelated to AI adoption entirely,” Emily Potosky, senior director of research at Gartner, said. “They were related to things like the federal government, just general sort of business right-sizing decisions after having hired on a lot of people in the 2021, 2022 era.”
Digging into multiple reports and Gartner’s surveys of CIOs and customer service leaders, Potosky and Senior Director Analyst Kathy Ross found that layoffs due to AI were not nearly as common as those due to federal actions and economic conditions.
A December 2025 Challenger jobs report backs up such findings. Across industries in 2025, the top reasons for job cuts were the Department of Government Efficiency’s actions and its downstream effects, followed by market and economic conditions, closings, and restructuring. AI was directly cited for less than 55,000 announced layoff plans.
DOGE effects, market woes led layoffs in 2025
The number of layoffs attributed to different factors across industries in 2025
In looking specifically at customer service, Gartner found that customer service staffing levels remain steady at most contact centers. A Gartner survey released in December found that only 1 in 5 customer service leaders had cut agent headcount. One-quarter had paused backfills, and just over half — 55% — reported steady headcount while serving more customers.
“What I have also seen, just in the industry holistically, is for AI, it’s not really taking over customer service, yet,” Dana Goldsholle, VP of business development at gig-based customer service company Arise, told CX Dive. “It’s taking over these simpler interactions of ‘Where’s my order?’ or it’s adding efficiencies to the agent’s workload to make it easier and to reduce the handle time.”
There’s another interesting aspect to businesses that have cut jobs due to AI: Most have done so for AI’s potential — to get the resources to invest in the technology, Potosky said. This has especially played out in contact centers.
“What I think is extra interesting is that for that smaller portion of layoffs where AI is playing a role, it’s actually not the result of AI successes,” Potosky said. “It’s opposite what you would think. Layoffs seem to be more part of a broader strategy to invest funds in AI, hoping for success down the line, because at the end of the day, you need funds to invest in AI.”
In essence, these businesses are rushing to reduce headcount before they have seen the gains of their AI investments.
Deciding on layoffs
Laying off workers before seeing AI investments produce ROI is not a recommended strategy, Potosky said.
With the pervasive narrative that businesses are cutting costs due to AI efficiency gains, service and support leaders face pressure to follow suit and rapidly reduce headcount.
“At the end of the day, headcount still is the biggest cost category for the majority of these leaders,” Potosky said. “They are still going to have to reduce headcount over time, but reducing the workforce too quickly is the wrong move, and is going to lead to a ton of unintended consequences.”
The key is creating a plan.
“The news around recent layoffs has created a false narrative: that organizations can and should drastically slash headcount, as they can replace these employees with AI,” Ross said in an email. “As the head of customer service and support, you need to proactively develop and communicate a workforce reduction strategy to your C-suite, or risk being handed one.”
Service leaders should create a compelling workforce reduction plan based on reducing their workforce “over time, on their own terms and guided by data,” according to Potosky.
Will companies have to rehire?
Axing your customer service workforce blindly on a promise of AI invites unintended consequences, from worse service quality and customer experience to harm to brand reputation and operational disruptions.
Nearly three-quarters of CIOs and technology leaders report that their organization is either losing money or only breaking even on AI investments, according to a Gartner survey of 500 leaders. Only 11% of leaders report that their most mature generative AI investment has fully met their primary objective.
Such findings are the reason the Potosky and Ross have another prediction: Half of those companies that have laid off workers due to AI will rehire them by 2027 under new titles.
“If you are shrinking too fast and you are dealing with these operational disruptions, if you’re dealing with this brand reputation issue, if you’re dealing with legal disputes, you’re going to have to rehire people to address those problems,” Potosky said.
AI frontrunners have already followed such a path.
In 2024, Klarna said its AI agent could do the work of 700 representatives. The company paused hiring and laid off customer service workers. But in 2025, the buy now, pay later company reinvested in human talent and began hiring customer service representatives yet again. And last week, Klarna CEO Sebastian Siemiatkowski said the company’s pursual of an Uber-style customer service model will make human assistance a “VIP experience.”
The shift highlights the need for the option to speak to a human in customer service, Julie Geller, principal research director at Info-Tech Research Group, told CX Dive at the time Klarna began rehiring customer representatives. AI should augment, not replace, human service.
When businesses rehire employees because they overextended themselves with their AI ambitions, the question is: What will those employees be charged with?
“I think they’re going to do the exact same work, which is part of why this is so bad,” Potosky said. “Because these organizations might save money in the short run, but they’re going to end up having to spend more in the long run if they end up rolling back their workforce reduction initiatives, and they’re going to be worse off than where they started.”