Gartner predicts businesses will rehire 30 per cent of staff replaced by AI

Research firm Gartner has projected that nearly a third of workers dismissed and replaced by artificial intelligence will be brought back into their organisations by 2029. In findings released on 28 October at its HR Symposium in Florida, the analyst firm warned that these rehires will often come at a steeper wage cost because employers rush staff cuts before fully understanding how daily tasks get done.

Caitlyn McDonough, a vice president analyst at Gartner, reported that many organisations are approaching automation backwards. Instead of evaluating which workflows deliver actual business results and determining the proper mix of software and staff, managers are making headcount reductions upfront.

The planning gap

The research reveals a broad shortfall in how companies prepare their teams for software changes. A Gartner survey of 297 chief human resources officers conducted in July showed that only 19 per cent have workforce planning methods capable of tracking job changes, accounting for software capabilities and aligning staffing with company targets.

Despite heavy corporate spending, broader research shared at the event found that while 77 per cent of board members anticipate artificial intelligence to deliver labour savings, only 3 per cent of organisations have exceeded their cost reduction goals through productivity gains. Meanwhile, organisations that maintain structured workforce planning are 1.4 times more likely to beat revenue targets and 1.5 times more likely to exceed cost goals.

Gartner noted that most workforce reviews work from the bottom up, assessing current job descriptions and assuming software will simply take over tasks. However, rising tool expenses and operational practicalities mean theoretical automations often stumble when human context is removed.

What this means for Australian businesses

For Australian small and medium enterprise owners, the findings show the financial danger of treating software as an immediate replacement for existing workers.

• Cutting staff before software has reliably handled a workflow risks stripping out institutional memory, customer relationship history and edge-case judgment that models cannot supply.
• Instead of trying to eliminate roles, look for specific, repetitive administrative chores your team can hand over to software so they have more hours for billable or client-facing work.
• Before changing team numbers, run software pilots alongside your employees for at least two quarters to measure actual output and reliability, not just software vendor promises.
• In Australia's tight skilled labour market, rehiring staff or recruiting replacements who understand your operations will cost far more in recruitment fees and training than any initial payroll savings.