In a move that initially sent shockwaves through the tech world, IBM laid off nearly 8,000 employees in 2023 as part of a sweeping initiative to automate routine tasks using artificial intelligence. The layoffs primarily impacted the company’s human resources division, where repetitive functions like payroll processing, vacation requests, and employee documentation were handed over to a proprietary AI platform called AskHR.
Headquartered in Armonk, New York, IBM touted the decision as a major step toward streamlining operations and reducing costs. The AskHR system proved highly effective, automating approximately 94% of all routine HR activities and contributing to an estimated $3.5 billion in productivity gains across more than 70 job roles.
Despite the scale of the layoffs, IBM’s overall employee count has since grown. In a recent interview with The Wall Street Journal, IBM CEO Arvind Krishna explained the unexpected development. “Our total employment has actually gone up,” Krishna said. “What AI does is it gives you more investment to put into other areas.” These areas include software engineering, marketing, and sales — roles that require creative thinking, complex decision-making, and direct client engagement.
Rather than reducing its workforce permanently, IBM reallocated resources saved through automation to expand departments that remain less susceptible to AI replacement. The company began hiring experts in software development, business strategy, marketing, and client-facing roles, reflecting a broader shift in the industry from operational support to innovation and customer growth.
IBM’s experience underscores a major trend in today’s AI-driven economy: while automation eliminates certain jobs, it also creates new roles that demand higher-order skills. The transformation at IBM highlights the growing need for talent capable of designing, managing, and selling AI-powered tools and services.
Other technology companies have encountered similar challenges. Duolingo, for instance, had to rehire staff after its reliance on chatbots failed to fully meet operational demands. These examples highlight the limitations of automation and the need for human expertise, especially in customer experience and problem-solving.
IBM’s AskHR platform has handled more than 11.5 million interactions since launch and has significantly improved customer satisfaction. The company’s net promoter score (NPS) for HR services jumped from -35 to +74 — a dramatic shift attributed to the speed and reliability of automated responses. Yet, about 6% of queries still require human intervention, proving that even advanced AI has its limits.
As AI integration deepens, IBM’s journey illustrates the need to balance innovation with workforce evolution. “The move toward automation allowed us to invest more in areas that need human creativity and interaction,” said Krishna. Rather than simply cutting costs, IBM has focused on restructuring its workforce to align with the changing demands of the digital economy.
With over 270,000 employees worldwide, IBM continues to adapt its business model to reflect the realities of a tech-driven future. The company’s decision to reinvest in human capital after embracing AI stands as a case study in how innovation can be harnessed to both disrupt and redefine the modern workplace.
