The true cost of AI cost-cutting: why businesses must consider the human impact

IT’S A CATCH-22: Al adoption among businesses of most, if not all kinds, is now a competitive must - yet it’s not a panacea and the human cost can be considerable.

- Julia Ahlfeldt from Julia Ahlfeldt Consulting. The views expressed here do not necessarily represent those of Independent Media or IOL.

This is both in terms of job displacement due to the adoption of fast-changing technology that can drive efficiencies (read: head count) but requires a new breed of skills, as well as the impact on consumers who continue to seek human-based support and customer care in response to over-digitised and automated path to purchase channels that lack sentience and person-to-person understanding and empathy.

This is a key insight of the 7th annual South African Customer Experience Report, which I coauthored and which has just been released.

While AI in all its forms - from Gen AI, AI assistants and Agentic AI, among many more - must, no doubt, be integrated into a business's operations and ways of working, asap, it needs to be done strategically and with a long term vision for AI transformation.

This is so that ethics are not compromised, employees - from manual task operators right up to the C-Suite - are upskilled swiftly (or risk becoming irrelevant and unemployable), and customers are assisted or can review brands and products quickly, digitally, through an increasing use of AI tools like LLMs immediately saw a tsunami of user interest, 2025 has been THE year of AI everywhere. However, despite Al's adoption both commercially and among consumers, just 11% of the business leaders surveyed in this year’s CX report self-identified themselves as ‘Al-driven leaders.’ An overwhelming majority of businesses, 91%, said that AI has a place in improving customer experiences but over a third also confessed that Al has not yet significantly impacted their team’s efforts, suggesting that far too many organisations are stuck in an ‘AI paralysis, acknowledging the potential competitive advantage, but are unsure or unskilled to develop a future-proof approach.

They do this at their peril.