Half of UK firms regret AI job cuts, turning to reskilling

New research from Orgvue shows that 39% of UK businesses made redundancies as a result of deploying artificial intelligence, but more than half of those companies now say those decisions were misguided.

The annual survey, conducted among more than 1,000 C-suite and senior decision-makers at medium and large organisations, indicates that business leaders are reassessing how they implement AI in the workplace. Among the 39% of organisations that made redundancies due to AI, 55% said they made the wrong choices regarding which jobs to cut.

As businesses navigate these issues, there is also an evident sense of confusion and concern internally. According to the findings, 38% of leaders say they do not understand AI's full impact on their operations, and one in four admit they are unsure which roles are most at risk as technology evolves.

Employee sentiment is also being affected. Over a third, or 34%, of companies report that workers have resigned as a direct result of AI deployment at their organisation. Productivity is also showing signs of decline as firms try to address the consequences of workforce decisions made on the back of AI adoption.

The survey highlights a change in attitude compared to last year. Fewer leaders now fear that AI will completely replace people in their organisations, with 48% expressing this concern, down from 54% in 2024. However, the proportion of leaders feeling responsible for protecting their workforce from redundancies has decreased to 62%, down from 70% the previous year.

Many leaders acknowledge risks associated with unregulated AI use. Almost half, or 47%, say employees using AI without proper controls is one of their biggest fears. These concerns have prompted 80% of businesses to plan reskilling initiatives to help staff use AI effectively, while 51% have introduced new internal policies regarding AI's application at work.

Of those surveyed, 41% say they have increased their Learning and Development budgets in order to ensure employees receive appropriate training in AI, and 51% believe reskilling existing staff is strategically important for preparing their organisation for the technology.

Oliver Shaw, Chief Executive Officer of Orgvue, commented: "While 2024 was the year of investment and optimism, businesses are learning the hard way that replacing people with AI without fully understanding the impact on their workforce can go badly wrong."

He added: "We're facing the worst global skills shortage in a generation and dismissing employees without a clear plan for workforce transformation is reckless. Some leaders are waking up to the fact that partnership between people and machines requires an intentional upskilling program if they're to see the productivity gains that AI promises."

Skills remain a key challenge for UK businesses, according to the research. More than a third, or 35%, of organisations cite a lack of AI expertise as a major barrier to successful implementation. Further, 25% do not know which roles could benefit the most from AI deployment, and 30% are uncertain which existing roles are most at risk from automation.

In response, 43% of businesses are working with third-party specialists to support their workforce in preparing for AI, a figure that is up 6% from 2024.

Despite these uncertainties and operational concerns, AI continues to be a central driver of organisational change, with 72% of leaders believing this trend will persist for at least the next three years, marking a 3% increase from the previous year. Four out of five businesses that invested in AI in 2024 intend to boost their investment in 2025.

There remains strong optimism about AI's transformative potential, with 76% of leaders confident their organisation will fully leverage the technology by the end of 2025. However, 27% admit that they lack a clear roadmap for AI, while 38% say they do not yet understand the extent of its impact on their business.

Shaw also stated: "As in 2024, businesses remain confident that AI will solve their biggest business challenges and will define how they structure their organisation and workforce in the future. But our research suggests this confidence could be misplaced."

He continued: "While it's encouraging to see investment in AI continue to grow, businesses need a better understanding of how the technology will change their workforce in the coming months and years. Questions remain unanswered over whether AI will yield enough return on investment in the near term to justify the costs associated with lost talent and downturn in productivity."