AI Investment Backfires: Execs Admit They Value Human Workers Less Despite Poor Returns

AI Investment Delivers Disappointing Returns Across Industries

Corporate enthusiasm for AI is colliding with harsh financial reality. According to Globalization Partners' third annual AI at Work Report, most AI spending has under-delivered, leaving executives feeling like they're burning cash 1

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. The report surveyed 2,850 executives at VP level and above across the US, Germany, Singapore, Australia, and France, revealing that 16% of companies saw a negative return on investment from AI last year 1

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. Even more striking, 73% of executives whose AI efforts did pay off said AI ROI fell short of expectations 2

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. These findings align with separate research from Gartner, which surveyed 350 global business executives at companies generating at least $1 billion annually 4

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. The message is clear: AI isn't paying off in the way companies anticipated.

Replacing Workers With AI Is Backfiring on Corporate Bottom Lines

The Gartner study uncovered a striking pattern in how companies approach AI adoption. While 80% of organizations that piloted AI or autonomous technology reported workforce reductions, these AI layoffs produced no measurable advantage 3

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. Companies that slashed staff to invest in AI saw the same financial gains as those who retained their employees, meaning they sacrificed valuable institutional knowledge and employee goodwill for nothing 3

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. Helen Poitevin, VP analyst at Gartner, explained to Fortune that "looking only at layoffs is shortsighted in terms of getting value from AI" 4

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. The data showed workforce reduction rates were nearly equal among those reporting higher ROI and those with modest or even negative outcomes from autonomous operations 5

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. AI-related workforce reductions have become particularly common in Silicon Valley, where outplacement services company Challenger, Gray and Christmas found AI was the leading reason for layoffs in March and April, with total AI-attributed layoffs hitting 49,135 for the full year 4

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AI Makes Them Value Human Workers Less Despite Trust Issues

A disturbing shift in executive attitudes has emerged alongside poor financial performance. The Globalization Partners report found that 82% of executives admit AI has lowered the value they place on human employees 1

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. This sentiment positions human workers as secondary assets, even though 60% of surveyed senior executives agreed humans still lead work operations with AI merely serving as a productivity booster 2

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. The contradiction deepens when examining trust levels. Only 23% of executives have total confidence in AI accuracy, and 61% expressed concerns about using AI to craft sensitive documents because they doubt the output is legally accurate 1

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. As a result, 69% now spend more time monitoring and reviewing AI-generated work 2

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. Gartner VP Analyst Padraig Byrne noted that "AI is everywhere, but most organizations are still figuring out how to monitor and trust these systems" 2

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. About 88% of executives expressed concern that employees are using AI performatively rather than adding business value, revealing growing suspicion toward their workforce 1

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Companies That Augment Employee Efficiency See Better Outcomes

The path to successful AI adoption appears to lie in amplification rather than replacement. Gartner's research found companies with the highest gains were those using AI to augment human workers, implementing the technology to make employees more productive rather than eliminating positions 4

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. Poitevin emphasized that "organizations that improve ROI are not those that eliminate the need for people, but those that amplify them by aggressively investing more in skills, roles and operating models that allow humans to guide and scale autonomous systems" 5

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. However, even this strategy faces challenges, as previous research suggests 54% of employees avoid using in-house AI tools altogether 3

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. Despite current trends, Gartner predicts autonomous business will be a net-positive job creator by 2028 to 2029, driven by new forms of work that AI cannot absorb 5

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. The research suggests the need for human talent will increase, not decrease, as lasting structural factors such as demographic decline ensure people remain central to running and scaling autonomous business 5

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Budget Cuts Loom as Executives Demand Results

With disappointing returns mounting, executives are preparing to tighten their AI budget if organizational goals aren't met this year 1

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. Around 70% of executives say they're prepared to cut AI spending if targets aren't achieved 2

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. Some observers suggest AI washing may be at play, where companies blame AI for layoffs they would have conducted anyway. OpenAI CEO Sam Altman acknowledged this phenomenon, noting there's "some AI washing where people are blaming AI for layoffs that they would otherwise do" 4

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. Poitevin suggested these workforce reductions appear to be companies testing the waters with AI adoption rather than initiating structural resets, describing them as "a kind of one-time exercise by many in small amounts, but not what translates to getting full ROI from their AI investment" 4

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. Despite current challenges, about half of executives still cite the scarcity of employees with AI skills and lack of data literacy as barriers to their AI goals 1

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. Gartner recommends implementing model monitoring policies to provide quality metrics and increased focus on infrastructure to handle high-volume model telemetry 2

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