AI Watch

Connecting the dots: Generative AI has been blamed for hundreds of thousands of layoffs over the past year, but evidence that companies moved too quickly to automate white-collar jobs is steadily mounting. Multiple recent studies suggest that many employers are refilling recently eliminated positions after overestimating AI’s productivity gains and cost savings.

In some studies, roughly a third of companies that attempted to replace workers with AI have either rehired some of them or expressed regret over the decision. The figures add to a growing body of evidence that the true cost of implementing generative AI is catching businesses off guard.

A late 2025 report from Forrester Research predicted that roughly half of AI-attributed layoffs would be quietly reversed. However, the so-called AI boomerang effect may not benefit all workers equally.

Graph from our story: 99% of executives expect AI to trigger layoffs within two years, survey finds. Source: Mercer.

While firms might quietly rehire experienced employees, those seeking entry-level jobs may still be out of luck. Forrester also predicted that most companies will use the opportunity to pivot to cheaper offshore labor.

Meanwhile, Gartner published research in February predicting that half of the businesses that eliminated customer service positions will rename and refill them by 2027. The forecast accompanied a separate October 2025 survey of 321 customer service and support leaders, which found that only 20% had actually reduced headcount while pivoting to AI – suggesting automation has largely augmented workers rather than replaced them.