IBM made headlines after replacing 8,000 workers with AI to streamline operations—only to rehire thousands shortly after.


In 2023, IBM made waves by laying off more than 8,000 employees, largely within its human resources division. The move was framed as part of a broader AI transformation strategy, spearheaded by a system called AskHR—an internal chatbot built to automate tasks like payroll, vacation scheduling and benefits documentation. It was, according to IBM executives, a necessary step towards streamlining operations and cutting costs.

And it worked—at least on paper. Within a year, IBM reported a $3.5 billion increase in productivity across over 70 job roles, a figure that was widely cited as proof that AI had arrived not just as a technological upgrade, but as a business imperative.

But what came next surprised many inside and outside the company: IBM began hiring again—in large numbers. Only this time, the roles weren’t in admin or back-office functions, but in software engineering, sales, and marketing—areas where human creativity and complex decision-making remain critical.

A Pivot, Not a U-Turn: AI Freed up Cash, Not People
IBM’s CEO, Arvind Krishna, addressed the unexpected shift in an interview with The Wall Street Journal, explaining that the cost savings from automation had been reinvested into higher-value roles. “Our total employment has actually gone up,” he said. “What [AI] does is it gives you more investment to put into other areas.”

In other words, while routine work was absorbed by machines, new needs emerged—ones that algorithms simply couldn’t handle. The company discovered that although AI could answer millions of employee queries (11.5 million, in fact, in 2024 alone), it couldn’t close a sales deal, design a user interface, or read between the lines of a client complaint.

A Blueprint for AI-Era Workforce Planning?
IBM’s journey may soon serve as a template for other companies navigating the complex intersection of AI adoption and workforce evolution. As noted in a 2025 study by Harvard Business Review, companies that approach AI as a workforce partner—not a workforce replacement—are more likely to see long-term returns.

Other tech giants are watching. Firms like Google, Microsoft, and Spotify have similarly embraced targeted automation, focusing on back-end efficiencies while continuing to invest heavily in human-led innovation.