Could AI Rescue Companies In An Economic Downturn? Think Twice

Could ongoing economic turbulence – or a recession – result in even more widespread adoption of AI and AI agents as a cost-saving move? There’s a risk to business leaders thinking in the event of sour times they could simply lay off workers and swap in AI systems to replace them – such a choice could be extremely counter-productive.

Cruelty of layoffs aside, the vast majority of businesses simply aren’t ready to simply adopt AI on a wholesale basis, said Phil Fersht, CEO of HFS Research, in a recent interview on Michael Krigman’s CXO Talk. The problem is, Fersht related, is most companies still don’t have the experience, skills, and knowledge to implement AI in a smart and scalable way.

Many companies are now “very aware of what they can do, but they’re still yet to have that burning-platform trigger to go do it,” he continued. “My concern is if we plunge into a deep recession, you’re gonna see some organizations literally come out and say, ‘We’re just gonna start relying a lot more on AI, and we’re gonna let people go.'”

The risk with such a “weaponized AI,” Fersht explained, is “how advanced they are with embracing this. Are they prepared to do anything?”

In working with many enterprises, Fersht found “they’re not doing a lot.” Only about 15% of executives feel they are truly ready to adopt AI in a positive and intelligent way, his firm has found through surveys. They have “fairly integrated views of where they’re going; they have a strong culture of support, and they’re embracing this.”

The majority of companies, he related, “are either still figuring it out or they’re not on the path. And this is just going to become more pronounced as we go through the next few months of macroeconomic turbulence.”

Fersht emphasized that executives aren’t consciously thinking about getting rid of people. “They’re actually thinking about, ‘How do we break from the past?’ Companies have much data, they don’t know what to do with it. They can’t join it up. They can’t make decisions on it.” Rather, the thinking is breaking away from legacy systems, to start to really build out the new with agentic systems.

There is an “AI-first mindset” that is shaping future hiring and skill-acquisition plans. Companies “are now insisting before you hire any new staff, you need to show that this work can’t be done by AI. We’ve reached that point quite quickly.”

The impact on offshoring – previously seen as a way to avoid new hiring – is already tangible, he continued. “Now, C-suite directives are, ‘can we not do this with AI?’ The whole point of agents is really this ability for companies to grow and scale in a way that you don’t need to keep adding more and more people. You do a lot more with the people you have, and I think that’s the positive way to think about this.”

For people in business, there’s both threat and opportunity. “If you’re in a job where you can be effectively replicated and replaced, you kind of know that, and you need to figure out, ‘how do I continue to add value in an enterprise?’”

The value for humans comes from collaboration, people skills, and empathy. “If you can become a great person everybody likes to work with, and you become very thoughtful about what you do, and you start to collaborate beyond your existing area, you become very valuable to your company.”