LONDON (IT BOLTWISE) – Despite the increasing integration of AI into companies, it is becoming apparent that laying off employees in favor of AI is not producing the desired results. An analysis byvisor reveals that many laid-off employees are being rehired, indicating planning problems in the company’s management.
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The increasing implementation of artificial intelligence (AI) in companies has led to a remarkable phenomenon: the so-called “layoff boomerang”. Despite the widespread belief that AI can replace jobs, analysis by workplace platform Ziel shows that many laid-off employees are being rehired. This suggests that replacing workers with AI is not as effective as often assumed.
Visor examined data from 2.4 million employees at 142 companies worldwide and found that about 5.3% of laid-off employees are rehired by their former employer. This rate has been relatively stable since 2018, but has recently seen a slight increase. Andrea Derler, an expert atvisor, explains that it is difficult to determine the exact causes of this increase because the data is looked at retrospectively.
A key point is that many executives have not yet had sufficient time to understand the true possibilities and costs of AI implementation. Derler emphasizes that companies should carefully consider which roles can actually be replaced by AI and the costs associated with installing AI infrastructure. These considerations are critical to weighing the benefits and risks of laying off employees in favor of AI.
Another aspect that is often overlooked in the discussion about AI and job cuts is the hidden costs of layoffs. According to data from software platform Orgvue, every dollar saved through layoffs costs the company $1.27 when costs like unemployment insurance and severance packages are taken into account. These financial burdens make it clear that layoffs are not an easy solution.
The challenges associated with adopting AI are also reflected in a study from MIT, which shows that 95% of organizations do not see a significant return on investment from their AI investments. This raises the question of whether the enormous sums invested in AI are actually being used sensibly.
Overall, it shows that the introduction of AI into companies brings with it complex problems that managers need to solve quickly. While news of job cuts may please some investors, data suggests companies may be more willing to rehire laid-off employees as they struggle with the challenges of AI integration.
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