Dive Brief:

• Seventeen percent of companies investing in artificial intelligence say that productivity gains generated from the technology have led to reduced headcount, Ernst & Young said Tuesday.
• Far more organizations surveyed by the Big Four accounting firm reported reinvesting their AI-driven gains into new AI capabilities (42%), cybersecurity enhancements (41%), research and development (39%), and employee “upskilling and reskilling” (38%), according to a report on the findings.
• “The data challenges the prevailing ‘headline news’ narrative that AI’s primary role is replacing the workforce,” EY Global Consulting AI Leader Dan Diasio said in an email response to questions. “If cost-cutting were the ultimate goal, that 17% figure would be much higher. Instead, we see from the data a definitive shift from a productivity mindset to a growth agenda.”

Dive Insight:

The global accounting and consulting firm’s research comes amid growing reports of AI-driven job cuts, particularly in the technology sector.

HP announced late last month that it expects to reduce its global headcount by between 4,000 and 6,000 employees by the end of fiscal year 2028 as part of an effort to drive “customer satisfaction, product innovation, and productivity through artificial intelligence adoption and enablement.”

Meanwhile, in an August podcast interview, Salesforce CEO Marc Benioff said the company reduced its customer service headcount from 9,000 to about 5,000 after AI agents began handling conversations with customers.

U.S.-based employers announced 71,321 layoffs in November, up 24% from the 57,727 job cuts reported in the same month last year, outplacement firm Challenger, Gray & Christmas said in a report last week. AI was directly tied to 6,280 cuts in November and has been cited for 54,694 layoff plans so far this year, Challenger reported.

Despite a rising number of layoff announcements where AI is factor, EY’s survey shows companies investing in the technology “aren't trying to run the same race with fewer people,” according to Diasio.

“They are effectively buying the capacity to run a faster, more complex race,” he said. “Leaders are realizing that the real value of productivity gains is in reinvestment versus a one-time cash out.”

Twenty-seven percent of companies investing in AI currently allocate a quarter or more of their overall IT budget for the technology, with that figure set to roughly double to 52% next year, according to the survey. The group spending half or more of their total IT budget on AI is expected to jump from just 3% today to 19% next year.

Nearly all (96%) of organizations investing in AI are experiencing productivity benefits from the technology, with 57% citing “significant” gains, the study found. A majority (56%) of respondents who reported positive returns from AI investments have seen “significant measurable improvements in overall financial performance,” EY said.

Sixty percent of respondents whose organizations are investing in the technology said the time spent on responsible AI training for employees has increased over the past year.

The survey of 500 U.S. business leaders was conducted from Sept. 19 to Oct. 16, EY said.