In 2023, IBM made headlines by announcing the layoffs of nearly 8,000 employees, primarily within the human resources department, aiming to replace these roles with artificial intelligence-driven automation. Surprisingly, this approach ended up triggering a fresh hiring spree—once again driven by AI.
How AI Disrupted IBM’s Workforce Dynamics
At the beginning of 2023, IBM undertook a bold move to eliminate thousands of positions, mostly in support roles, and substitute them with AI solutions.
Their clear objective was to automate up to 30% of repetitive functions, especially within HR, thereby significantly boosting productivity.
This move was not unique to IBM; it was part of a global trend, with other major tech players like Google and Spotify also implementing large-scale layoffs.
However, IBM pushed this experiment further than its rivals. Utilizing AskHR, an AI-powered conversational tool, the company automated 94% of routine HR tasks, ranging from vacation approval to payroll processing and employee documentation management. This extensive automation led to a productivity increase worth $3.5 billion spanning more than 70 distinct business units.
What ensued was unforeseen even by IBM’s senior executives.
Instead of a sustained decrease in workforce, the total employee count climbed back up following the layoffs. IBM’s CEO, Arvind Krishna, told the Wall Street Journal, “Although we’ve accomplished a great deal in leveraging AI, our overall headcount has grown because AI has enabled us to invest more extensively in other sectors.”
The automation freed up financial and human capital, which was then redirected into high-value areas. IBM began heavily recruiting software engineers, sales professionals, and marketing experts—roles that require human creativity, analytical thinking, and interpersonal skills that machines cannot replicate.
While AI took over repetitive and predictable duties, the demand for human expertise surged in strategic domains.
A Shift in the Labor Market Landscape
IBM’s experience highlights a broader trend: AI is not merely eliminating jobs; it is creating new ones that often demand higher qualifications and offer better salaries. Yet this shift brings challenges.
Positions most vulnerable to automation, such as support roles, are shrinking, whereas there is growing demand for workers skilled in managing, designing, and marketing AI technologies.
IBM’s story is not unique. Other firms like Duolingo and certain customer service platforms have attempted to replace large segments of their workforce with chatbots, sometimes achieving mixed results, which compelled them to hire specialists to address automation shortcomings.
The success of IBM’s automation effort hinges on its ability to reinvest the savings into burgeoning sectors. The AskHR platform is a prime example: by 2024, it had managed over 11.5 million user interactions and saw customer satisfaction scores (NPS) improve dramatically from -35 to +74 within a few years.
Despite these achievements, about 6% of inquiries still require human intervention, underscoring that the transformation remains a work in progress and certain skills continue to be indispensable.
This IBM case brings to the forefront questions about the future of work in the AI era. According to the World Economic Forum, nearly 92 million jobs may disappear by 2030 due to automation, but new roles are rapidly materializing.
The critical challenge for companies and employees alike is to anticipate these changes, prepare through training, and adapt to the evolving labor market. At IBM, AI hasn’t just cut jobs—it compelled a thorough reevaluation of HR strategies and a reinvention of modern employment structures.
