“There’s no connection or correlation between people who are achieving ROI and layoffs,” said Helen Poitevin, distinguished vice president analyst at Gartner, adding that labor reduction is “not the best” ROI metric. Other factors such as revenue, growth, and time to market are more effective in achieving a strong ROI.
“Those who only look to the workforce tend to be the ‘laggards,’ because they’re not going after the broader set of value that they can get to,” she said. This approach can also be “very disruptive more broadly,” she said, noting that some organizations who cut staff were forced to quickly rehire employees soon after.
That’s not to say companies aren’t cutting jobs, said Poitevin, but doing so isn’t the main route to solid ROI. Instead, organizations with higher levels of return on their spending looked beyond workforce reductions and saw AI as a way to improve employee productivity.
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