New Delhi: Workforce reductions linked to artificial intelligence adoption are failing to generate stronger returns on investment for companies, according to analysts and a recent global survey by Gartner.

The findings come at a time when major technology firms and IT services companies are investing billions of dollars into AI infrastructure while simultaneously cutting thousands of jobs in efforts to improve profitability and operational efficiency.

A Gartner survey conducted among 350 business executives from organisations with annual revenues exceeding $1 billion found that nearly 80 per cent of companies piloting or deploying autonomous business systems had reduced their workforce.

However, the survey revealed that organisations reporting strong AI returns had nearly the same level of workforce reductions as companies experiencing weak or negative outcomes.

Analysts question effectiveness of layoffs

Helen Poitevin, Vice President Analyst at Gartner, said many companies are wrongly assuming layoffs automatically improve returns from AI investments.

“Many CEOs turn to layoffs to demonstrate quick AI returns; however, this disposition is misplaced,” Poitevin said.

According to Gartner, cutting employees may temporarily free up budgets but does not necessarily improve productivity or long-term returns.

“Workforce reductions may create budget room, but they do not create return. Organisations that improve ROI are those that invest in skills, new roles and operating models that help humans guide and scale autonomous systems,” she explained.

Analysts said the data suggests companies achieving better AI-driven growth are focusing more on workforce transformation rather than workforce elimination.

“The data clearly shows layoffs are not a reliable indicator of AI success,” a senior analyst from a domestic brokerage firm said.

“Companies seeing stronger returns are typically investing in employee adaptation, process redesign and AI integration rather than only reducing headcount,” the analyst added.

Global AI spending rising rapidly

The study comes amid a sharp increase in worldwide spending on AI technologies and autonomous systems.

Gartner estimates spending on AI agent software will rise from $86.4 billion in 2025 to $206.5 billion in 2026 before reaching $376.3 billion in 2027.

Technology companies are aggressively expanding AI infrastructure, cloud computing capabilities and automation platforms to remain competitive in the evolving digital economy.

At the same time, layoffs across the global technology sector continue to accelerate.

According to Layoffs.fyi, more than 1,01,550 employees across 120 technology companies have lost their jobs in 2026 alone.

Major firms restructure amid AI expansion

Several large global companies have combined major AI investments with extensive workforce restructuring exercises.

Oracle Corporation has reportedly initiated a restructuring programme affecting between 20,000 and 30,000 employees worldwide, accounting for nearly 18 per cent of its workforce.

Reports suggest that around 12,000 employees in India could be impacted.

The restructuring comes as Oracle increases spending on AI and cloud infrastructure projects. The company has announced plans to invest nearly $50 billion into AI infrastructure development.

India’s largest IT services companies are also undergoing major transitions while scaling up their AI businesses.

Tata Consultancy Services reported restructuring expenses of ₹1,388 crore in FY26 under exceptional items connected to workforce realignment efforts.

The company’s employee count reportedly declined by more than 23,000 during the financial year.

At the same time, TCS significantly expanded its AI operations. The company stated that annualised AI-related revenue reached $2.3 billion in the fourth quarter of FY26, compared to $1.8 billion in the previous quarter.

TCS also announced plans to build a large AI data centre business in India, beginning with a 100 MW deployment that may eventually scale up to 1 GW.

IT firms balancing AI growth and workforce changes

Cognizant has also launched a major restructuring initiative called Project Leap.

The company expects restructuring costs between $230 million and $320 million, with nearly $200 million to $270 million allocated for severance and employee-related expenses.

Industry reports indicate that between 12,000 and 15,000 employees could be affected by the restructuring programme.

Despite concerns surrounding layoffs, Gartner believes AI adoption will eventually create new forms of employment and human oversight roles rather than permanently reducing workforce requirements.

“Long term, autonomous business will create more work for humans, not less,” Poitevin said.

Experts believe future success in AI adoption will depend on how effectively companies combine automation with workforce reskilling, operational redesign and human supervision rather than relying solely on cost-cutting measures.

As global AI spending continues to surge, businesses are likely to face increasing pressure to balance profitability, innovation and workforce stability in the years ahead.