In 2024, Klarna made headlines when it announced its AI agent could handle the workload of 700 customer service representatives.
The Swedish fintech company also said its OpenAI-powered assistant matched human agents on customer satisfaction scores.
Cut to last year, when founder and Chief Executive Officer Sebastian Siemiatkowski revealed that Klarna was once again recruiting human customer service representatives to ensure customers could always choose to speak to a person.
“[I]t’s so critical that you are clear to your customer that there will always be a human if you want,” Siemiatkowski told Bloomberg, acknowledging that an excessive focus on cost-cutting had come at the expense of service quality.
His comments have since become emblematic of a broader trend emerging across industries: companies that aggressively embraced artificial intelligence to reduce headcount are increasingly rediscovering the value of human workers.
Companies rethink all-AI strategies
Klarna’s shift did not amount to an abandonment of artificial intelligence.
The company later clarified in a statement cited by Forbes that it remained committed to an AI-first strategy, noting that its AI assistant now performs work equivalent to more than 800 full-time roles, up from the previously cited 700.
“Klarna is not reversing on AI,” the company said, adding that its latest hiring initiative reflected a dual-track strategy combining scalable AI with high-quality human support rather than a retreat from automation.
Industry observers argue the company’s experience highlights the practical limitations of deploying AI at scale.
Daniel Keller, a Forbes Councils member, wrote that the issue was less about AI failing than businesses overestimating its readiness for complex customer interactions.
“The gap between what AI can do in a controlled environment and what it can do at scale, with real customers and real complexity, remains wider than most executive teams anticipated,” Keller wrote, adding that many companies had misdiagnosed AI’s current capabilities.
Ford, IBM and banks also change course
Klarna is far from alone.
Bloomberg recently reported that Ford had brought back around 350 veteran engineers after discovering its automated design and quality systems could not replicate the expertise of experienced staff it had previously let go.
The automaker refers to these specialists as its “gray beard” engineers.
“Artificial intelligence is a fantastic tool, but it’s only as good as the information you use to train it,” Charles Poon, vice president of vehicle hardware engineering, told reporters.
“Over prior years, we didn’t pay as much attention as we should have to the experience of our most knowledgeable engineers who have been with us through many product cycles,” he said.
Australia’s Commonwealth Bank also reversed an earlier decision to replace more than 40 customer service employees with an AI-powered voice bot after the system struggled to cope with customer demand, leading to increased call volumes.
According to an ABC report, the bank later admitted it had failed to fully assess operational requirements before eliminating the roles.
IBM has similarly adjusted its workforce strategy.
Although the technology company successfully automated roughly 94% of routine human resources requests using AI, executives said the remaining cases — involving ethical questions and more nuanced decision-making — still required human judgment.
IBM subsequently announced plans to triple entry-level hiring in the United States during 2026.
“There’s no pipeline; the well simply dries up,” IBM Chief Human Resources Officer Nickle LaMoreaux said while discussing the need to continue investing in junior talent.
Why are companies rehiring after AI-driven layoffs
Despite these reversals, companies continue to announce AI-related workforce reductions.
According to Challenger, Gray & Christmas, US employers announced 97,006 job cuts in May, with artificial intelligence cited as the leading reason for layoffs for the third consecutive month.
Employers attributed 38,579 layoffs to AI during the month — the highest monthly total recorded since Challenger began tracking AI-related job reductions in 2023. The figure represented roughly 40% of all announced layoffs.
Yet fresh research suggests many companies are also already reversing those decisions.
A survey conducted by workforce development firm Careerminds in February 2026, found that two-thirds of companies that carried out AI-driven layoffs have since begun rehiring.
Among companies that rehired, 32.7% restored between a quarter and half of the roles they had initially eliminated, while 35.6% brought back more than half of the positions they had cut.
More than half of HR leaders surveyed said the rehiring process began within six months of the layoffs.
Separate research by Orgvue found that while 39% of business leaders had reduced staff because of AI, 55% later admitted those redundancy decisions had been mistakes.
Human oversight remains critical
Workforce experts say the findings illustrate the continuing need for human oversight even as AI capabilities improve.
Jessica Zhang, senior vice president for Asia-Pacific at HR solutions provider ADP, said inconsistent or inaccurate AI outputs often require companies to reintroduce human supervision.
“Where AI outputs are inconsistent, inaccurate, or difficult to apply, companies often need to reintroduce human oversight,” Zhang said in a CNBC report, adding that duplicated work and slower decision-making can erode the productivity gains companies expect from automation.
Lacey Kaelani, chief executive of recruitment platform Metaintro, told The Washington Times that companies are increasingly reposting junior-level positions resembling jobs they eliminated months earlier.
She said customers quickly recognize when interactions are dominated by automated responses.
“A lot of companies are suffering from a higher volume of customer dissatisfaction,” Kaelani said.
Keith Spencer, a career expert at FlexJobs, argued that widespread layoffs have also created what he described as an “empathy gap” by removing employees capable of handling complex customer situations.
“In some cases, organizations found that smaller teams struggled to maintain existing levels of quality, oversight or customer responsiveness once those roles were eliminated,” Spencer said.
Future outlook for AI-related hiring and firing
In a research report published in February this year, Gartner said that by 2027, 50% of companies that attributed headcount reduction to AI will rehire staff to perform similar functions, but under different job titles.
“While AI-driven layoffs have captured attention, the reality is more complex,” said Kathy Ross, Senior Director Analyst in the Gartner Customer Service & Support practice.
Most recent workforce reductions were influenced by broader economic conditions rather than automation alone. As organizations encounter the limits of AI and rising customer expectations, they will need to reinvest in human talent to sustain service quality and growth.
Kathy Ross
Senior Director Analyst, Gartner Customer Service & Support.
Another research from Gartner suggested that simply replacing workers with AI does not necessarily improve financial performance.
The consultancy surveyed 350 executives at companies generating at least $1 billion in annual revenue and found no meaningful relationship between workforce reductions and stronger returns on investment.
Although 80% of organizations piloting AI reported cutting jobs, companies achieving high returns were no more likely to have reduced staff than lower-performing peers.
Instead, Gartner concluded that businesses often underestimate the hidden costs associated with AI deployment, including implementation challenges, integration failures, hallucinations, security risks and the ongoing need for human oversight.
The study found that companies generating the strongest returns were not those replacing the most employees, but those integrating artificial intelligence thoughtfully into existing workflows.
As companies continue investing billions of dollars into AI, recent experiences suggest the technology may reshape work — but not eliminate the need for people as quickly as many executives once anticipated.
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