AI Layoff Reversals: Every Company That Rehired Workers Replaced by AI

An increasing number of companies are reversing AI layoffs.

(This trend is sometimes referred to as the “AI Layoff Boomerang”).

In some cases, automation produced weaker results than expected. And in others, human supervision remained necessary, or the financial benefits were smaller than projected.

At least 5 major companies have publicly rolled back AI-driven job cuts since 2025

The reversals range from directly restoring eliminated roles to rebuilding parts of the workforce that automation was expected to replace.

Major companies that have reversed earlier AI-driven cuts include:

• Klarna
• Commonwealth Bank of Australia
• Ford
• IBM
• General Motors

2 in 3 companies that made AI-driven layoffs have already rehired

According to Careerminds, the majority of companies that went through with AI-related cuts have at least partially reversed that decision.

The latest available data reveals that 35.6% of organizations have rehired over half of their AI-related layoffs. And 32.7% have rehired between a quarter and half of their former employees.

In total, 69.9% of companies that rehired did so within six months.

Here’s how long it took for companies to start rehiring after AI-related layoffs:

Source: Careerminds

57% of executives say AI will actually increase headcount

Instead of leading to layoffs and hiring freezes, the majority of executives expect AI to expand workforce capacity and boost headcount.

According to a 2026 forecast, 57% believe this will be the case, compared to just 15% who predict a downturn in employees.

Source: Forrester

55% of leaders who cut staff for AI admit it was the wrong decision

According to a survey of 1,000 senior decision-makers, around 2 in 5 (39%) have made layoffs in favor of using AI.

However, of those who chose to make the leap, more than half (55%) have said it was the wrong choice. Those findings are corroborated by Forrester research, which also revealed that 55% of employers have come to regret the decision to make AI-related layoffs.

Sources: Orgvue, Forrester

The financial sector has reversed 44% of AI job cuts

Based on a survey of over 2,000 hiring managers, the finance industry has rehired the most employees after AI-related layoffs.

Difficulties in fully automating high-stakes, judgment-heavy work may explain why 44% of cuts have been reversed. That’s followed by HR (35%) and technology (32%).

Source: Servola

Half of companies that cut customer service staff due to AI will rehire by 2027

Companies are increasingly finding that AI is useful for straightforward queries, but emotionally sensitive issues and situations requiring judgment still need human input. In June 2025, Gartner predicted that 50% of companies would abandon plans to replace customer service roles with AI by 2027. 

Recent forecasts have gone one step further, with 50% of companies expected to rehire service staff made redundant by AI in 2027.

By 2028, it is projected that no Fortune 500 company will have fully eliminated human customer service roles.

Sources: Gartner, Gartner (2), Gartner (3)

Approximately 1 in 3 companies spent more on rehiring than AI saved

The decision to replace employees with AI often comes down to finances (either cutting costs, increasing efficiency, or both). Yet the reality is that automation has delivered less value than expected for many companies.

In fact, 30.9% of organizations that brought back employees spent more doing so than they saved from the original cut.

Around 2 in 5 (42.37%) managed to break even after rehiring. And just 1 in 4 (26.69%) companies ended up in a stronger financial position after backtracking.

Source: Forrester

95% of enterprise AI pilots deliver little to no measurable return

Despite the rush to move towards AI, the vast majority (95%) of AI pilots are underdelivering. Many AI pilots struggle once companies try to use them in day-to-day operations, where unreliable outputs and limited productivity gains can quickly eat into the expected returns.

This has led to an increasing number of companies abandoning AI plans. In 2025, 42% called off AI initiatives, marking a steep rise from 17% a year earlier.

Sources: Yahoo Finance, CIO Dive

AI is now the #1 cited reason for US layoffs

Between January and May 2026, AI was cited in 87,714 cuts, equating to 22% of all layoffs in the US. That’s already more than the 54,836 jobs lost to AI in 2025, which made up 5% of total cuts.

May 2026 alone saw a record 38,579 AI-related layoffs. That made up a staggering 40% of all cuts.

However, figures related to AI layoffs may be exaggerated.

Some analysts suggest that “AI washing” is being used to misrepresent data, disguising ordinary cost-cutting as a strategic AI-first approach.

Sources: Challenger, Gray & Christmas, The Guardian

Major AI Layoff Reversals

Below is a company-by-company breakdown of the original cuts or hiring freezes, the number of workers affected, and what prompted each reversal.

Klarna

Employees Rehired: Ongoing; rehiring freelance agents on an “Uber-type” model
Original AI Cut: 2,000 (February 2024)
Industry: Fintech
Reversal Date: May 2025 (15 months after initial cuts)

Having initially cut around 40% of their workforce, Klarna began rehiring in an effort to improve customer experience. CEO Sebastian Siemiatkowski cited cost as the main reason for the pivot away from AI: “As cost unfortunately seems to have been a too predominant evaluation factor when organizing this, what you end up having is lower quality.” 

Commonwealth Bank of Australia

Roles Restored: 45
Original AI Cut: 45 (July 2025)
Industry: Banking
Reversal Date: August 2025 (6 weeks after cuts)

Just weeks after declaring 45 customer service roles redundant and replacing them with an AI voice bot, Commonwealth Bank of Australia reversed its decision. The bank was quick to call it an “error” after the implementation of the voice-bot led to an increase in work for existing staff. The situation escalated to the point where employees were being offered overtime, and team leaders were being asked to take phone calls before the u-turn.

Ford

Employees Rehired: 350 veteran engineers
Original AI Cut: Undisclosed; replaced by 900 AI cameras
Industry: Automotive
Reversal Date: June 2026

Ford VP Charles Poon admitted that “Mistakenly, we thought that by just introducing artificial intelligence and ingesting the design requirements that we had, that would produce a high-quality product.” This came after 350 “gray beard” engineers were rehired to mentor younger staff, lead design reviews, and improve the AI systems.

IBM

Employees Rehired: Tripling US entry-level hiring; raw figure undisclosed
Original AI Cut: 2023 hiring pause on 7,800 back-office roles; “a couple hundred” HR roles
Industry: Technology
Reversal Date: February 2026

IBM CEO Arvind Krishna said in 2023 that he “could easily see 30% of that getting replaced by AI and automation over a five-year period.” That equated to 7,800 back-office roles. And while these employees weren’t made redundant, there would be no hiring to replace attritional loss. 

At the same time, “a couple hundred” HR roles were replaced by AskHR, which would handle 94% of routine requests. However, as of February 2026, the company announced it would scale up entry-level hiring.

General Motors

Employees Rehired: Undisclosed
Original AI Cut: 600 (May 2026)
Industry: Automotive
Reversal Date: May 2026 (same announcement)

As part of a skills swap, GM announced in May 2026 that it would be laying off around 600 salaried IT workers, more than 10% of the IT department. As part of a move to “transform its Information Technology organization to better position the company for the future.”, GM is recruiting for new roles in AI-native development, data/cloud engineering, and prompt engineering.

Companies That Pulled Back on Their AI Replacement Plans

Not every company that reconsiders AI goes as far as to rehire employees.

These cases represent a less drastic retreat from AI replacement strategies:

• Salesforce – After cutting 4,000 support roles and stating “I need less heads” in September 2025, CEO Marc Benioff revealed that he’d hired 3,000 to 5,000 salespeople the following month.
• McDonald’s – In 2024, three years into a partnership with IBM, the fast food chain called off its AI drive-thru test at 100+ restaurants following order errors.
• Taco Bell – AI voice glitches, including a viral clip in which an order of 18,000 cups of water crashed the system, led to “reevaluating” Taco Bell’s approach in August 2025. 
• Duolingo – CEO Luis von Ahn downplayed the controversy surrounding an “AI-first” staff memo, stating that the company would not be cutting full-time employees. Instead, it is contractors at risk, depending on need.
• Air Canada – A landmark legal case saw Air Canada pay out after being held liable for chatbot misinformation. The AI chatbot was reportedly disabled following the incident.