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AI-driven layoffs backfire as employers begin rehiring displaced workers again – Report

Companies are increasingly reversing earlier assumptions that artificial intelligence can handle every task, bringing back human workers as investors grow concerned about the long-term sustainability of the AI-driven boom in financial markets.

Automaker Ford is among the latest firms to shift strategy. The company is reportedly rehiring hundreds of experienced engineers to tackle vehicle quality issues that automated systems failed to resolve.

“Artificial intelligence is a fantastic tool, but it’s only as good as the information you use to train it,” said Charles Poon, Ford’s vice president of vehicle hardware engineering

Other companies that have scaled back AI-led workforce reductions and renewed their focus on human talent include Commonwealth Bank of Australia and software giant IBM, according to CNBC.

Last year, CBA laid off more than 40 customer service employees and replaced them with an AI-powered voice bot.

However, the system struggled to handle customer interactions effectively, resulting in a surge in call volumes and forcing the bank to reinstate the affected roles.

Commenting on the decision, Australia’s Finance Sector Union described the reversal as “a massive win.”

According to an ABC report published in August last year, CBA acknowledged that it “did not adequately consider all relevant business considerations” before announcing the redundancies and admitted that “we should have been more thorough in our assessment of the roles required.”

IBM experienced a similar challenge after automating much of its human resources operations with artificial intelligence.

While the system successfully handled about 94 per cent of routine HR requests, it struggled with the remaining 6 per cent, particularly complex cases involving ethical judgment and nuanced decision-making.

Recognising the limits of AI, IBM later announced plans to triple its entry-level hiring in the United States across all business units in 2026, signalling a renewed emphasis on human talent alongside automation.

“If we don’t continue to invest in entry-level hires, what happens in 3–5 years?,” IBM chief human resources officer Nickle LaMoreaux said at a Charter AI Summit in New York. “There’s no pipeline; the well simply dries up.”

According to a report by Orgvue, 39 per cent of business leaders said they had made employees redundant following the deployment of artificial intelligence.

However, more than half of them—55 per cent, later acknowledged that those layoffs were the wrong decision, underscoring the challenges companies face in relying too heavily on AI.