By Lorde Astor West | CEO & Founder RadHash

In the race to embrace AI, tech leadership made a fatal miscalculation: they believed replacement was the same as progress.

Over the past two years, companies proudly slashed staff in favor of AI—packaging layoffs as “transformation,” and positioning language models as a next-gen workforce. But behind the scenes, a quieter story has begun to unfold. Not only did these companies misfire—they’re now reversing course, rehiring the very humans they once deemed obsolete.

This isn’t just a glitch in the system. It’s a case study in executive overconfidence, margin-obsessed decision-making, and quarterly thinking masquerading as innovation.

🚨 The Setup: AI as a Scapegoat

Starting in 2022, a wave of companies announced “AI-first” initiatives with eerie uniformity. Human layoffs were framed as evolutionary, even virtuous.

Klarna claimed its AI chatbots had replaced 700 jobs. Shopify instructed managers to only hire if AI couldn’t do the work. IBM rolled out automated HR bots while eliminating the teams they were meant to augment. It was a masterclass in efficiency theater.

But these weren't strategic shifts—they were theater performances for shareholders, dressed in buzzwords and fueled by spreadsheets. The result? Fragile systems, broken customer experiences, and a costly cleanup effort.

🧨 The Fallout: You Can’t Automate Trust

Klarna

Swapped human customer support for bots. Initially celebrated, the change sparked a wave of frustration from users stuck in AI loops. By 2025, Klarna began quietly rehiring people to handle tasks bots simply couldn’t.

IBM

Replaced thousands of HR staff with an AI helpdesk. The outcome? A lack of empathy and judgment in sensitive scenarios. The company began to rebuild its teams in silence.

Agencies & Startups

In marketing and dev shops across the globe, humans are being brought back to rewrite AI-generated content, fix hallucinated code, and repair degraded user experiences. As one Reddit engineer put it:

“They laid us off last year. Now we’re back as contractors at double the rate cleaning up the AI mess.”

Across sectors, this theme repeats. AI wasn’t enhancing the workforce. It was optimization at the expense of actual performance.

🧃 When Efficiency Theater Backfires

This isn’t an isolated stumble—it’s a widespread retreat from the myth of effortless automation:

Company	Layoff Year	What AI Replaced	What Happened
Klarna	2022	Customer Service	Rehiring to restore trust and nuance
IBM	2023	HR Functions	Quietly bringing back human judgment
Shopify	2023	Product & Support	AI failed to deliver, human teams reinstated
Duolingo	2024	Moderation & Content	Brand quality declined, began rehiring
Agencies	Ongoing	Writers & Engineers	AI-generated work now requires human rescue

This pattern is a symptom of a deeper issue: the cult of scale and speed, where technology is applied not for better outcomes but for faster wins on investor calls.

💀 What Really Happened: The Optimization Illusion

• Leadership saw an opportunity to “streamline” by reducing headcount.
• They repackaged layoffs as AI innovation to satisfy market expectations.
• They traded experience for unproven tooling.
• They discovered too late that AI lacked empathy, coherence, and context.
• They began quietly rehiring or outsourcing the very work they dismissed.

The companies didn’t just underestimate the challenge—they overestimated their understanding of what intelligence actually is.

🔮 The Reckoning Is Here

This isn’t a rejection of AI. It’s a rejection of lazy AI. Of the idea that automation is synonymous with progress. Of the belief that replacing humans is a shortcut to value creation.

What we’re seeing now is a return to balance. The future isn’t AI or humans. It’s AI with humans—designed around augmentation, not elimination.

But for now, the damage is being quietly swept under the rug.

🧠 Final Thought: You Can’t Lay Off Judgment

You can’t automate trust.
You can’t outsource wisdom.
And you can’t scale sustainably when your strategy is built for the earnings call, not the end user.

AI won’t save you from short-sighted leadership.
It will only reveal it faster.

“The real innovation isn’t replacing your people—it’s building systems that make your people impossible to replace.”