source: https://sea.peoplemattersglobal.com/news/workforce-planning/ai-layoffs-backfire-as-33percent-of-companies-lose-critical-skills-and-expertise-report-48771

CAVITE, PHILIPPINES — AI-driven layoffs are backfiring, with two-thirds of companies that cut jobs for artificial intelligence already rehiring workers after losing critical skills and discovering the limits of automation, according to a new workforce report, March 15, 2026.

The study by outplacement firm Careerminds, based on a February 2026 survey of 600 HR professionals who carried out layoffs in the past year, found many organizations underestimated how difficult it would be to replace human roles with automated systems.

The findings come after a wave of AI-driven layoffs across the tech and corporate sectors as companies rushed to automate work and reduce labor costs.

Companies move quickly to rehire

A significant share of companies reversed course soon after cutting jobs.

About 32.7% of organizations rehired between 25% and 50% of the roles they previously eliminated, while 35.6% rehired more than half of the positions cut, the report found.

More than 52% of HR leaders said their companies rehired workers within six months, and 17.8% said they rehired within three months. Only 2.1% said it took more than a year.

Some HR leaders described the reversals as “instant regret,” saying companies moved too quickly to replace workers with automation before fully understanding AI’s limitations.

AI fell short of expectations

The report found many companies overestimated AI’s ability to replace entire jobs.

More than half of HR leaders said AI systems required significantly more human oversight and judgment than expected, while 20% said the technology underperformed or failed to deliver the results promised.

Only 21.4% said automation fully replaced roles without major issues.

Instead, 66.1% said AI could automate certain tasks within jobs but could not replace entire roles, reinforcing the idea that many positions require human expertise, judgment and context.

Layoffs caused disruptions

Some companies experienced operational challenges after reducing staff.

About one in eight organizations said layoffs caused disruptions that outweighed the expected benefits, according to the survey.

Many companies also lost critical institutional knowledge after layoffs.

Nearly 33% of HR leaders said their organizations lost critical skills and expertise, while 28.1% said the remaining workforce could not fill those knowledge gaps.

Entry-level workers were the group most affected by AI-driven layoffs, accounting for 31.5% of cuts, followed by mid-level roles at 15.6%.

AI savings often disappeared

The financial benefits of replacing workers with AI proved less clear than many companies expected.

About 31% of organizations said rehiring ultimately cost more than the savings from layoffs, while 42.4% said the costs and savings roughly balanced out.

Only about one-quarter of companies reported coming out financially ahead.

The report noted these figures did not account for hidden costs such as productivity losses, declining morale and the loss of institutional knowledge.

Companies rethink AI layoffs

Most HR leaders surveyed said they would change how they approach AI-driven restructuring in the future.

Only 8.4% said their workforce restructuring worked exactly as planned.

Meanwhile, 41.2% said they would take a completely different approach, and 50.3% said they would rethink which roles should be cut.

The report also found many layoffs may have been avoidable.

More than half of HR leaders said up to 25% of eliminated roles could have been redeployed elsewhere in their organizations, while 28.3% said between 26% and 50% of the jobs could have been reassigned to different work.

However, 55.1% of organizations said they did not formally consider reskilling or redeployment before layoffs.

Shift toward human-AI collaboration

The report suggests companies are increasingly changing how they deploy artificial intelligence in the workplace.

Rather than replacing workers entirely, organizations are using AI to automate routine tasks while allowing employees to focus on higher-value responsibilities requiring human judgment and creativity.

The findings suggest the future of AI in the workplace may depend less on replacing workers and more on using artificial intelligence to augment human work.