A recent Garner report has revealed that over 50% of customer service organizations will double their technology spend by 2028.
As more enterprises increase technology investment to reduce labor costs with AI, many companies are underestimating the ongoing need for skilled employees alongside the technology.
Instead of replacing departments with technology, enterprises should focus on realigning the workforce with higher-value activities.
Kathy Ross, Vice President Analyst in the Gartner Customer Service & Support practice, argues that many leaders now expect quick savings from AI, but most organizations still need human input as workforce requirements shift rather than decline.
“Leaders are hoping that AI will deliver immediate cost savings, but most organizations are understating the talent required to make AI successful,” she said.
“Technology spend is rising rapidly, yet talent needs are evolving - not disappearing.”
AI Investment Grows as Executives Target Lower Labor Costs
As organizations continue to invest further in customer service technology, many executives expect AI to lower labor costs, anticipating efficiency gains from automation, improved self-service, and faster resolution paths.
By expanding AI, analytics, routing tools, and automation, these tools can shift work away from human agents and reduce the volume that requires staffed support.
However, many enterprises are keeping their headcount but reallocating people to new tasks instead of removing roles.
And whilst only 20% of organizations have reduced their headcount because of AI, Gartner warns that many other enterprises may be underestimating the value of human talent.
Despite the current number of organizations keeping their overall headcount, many large companies that have decided to make layoffs to invest in AI have done so in the thousands.
At the end of March, 30,000 Oracle employees were emailed their immediate resignation from the company so that the vendor could continue investing in AI.
By pursuing heavy capital investment in AI technology and data center build-outs, Oracle hopes to free up significant cash flow to support these initiatives, raising questions about the future availability of support services and human expertise.
Why Human Judgment Still Matters in Customer Service
Companies that decide to remove customer support teams in favor of larger AI investments often face service gaps and higher recovery costs later down the line.
When AI can be used to handle routine queries, many customer problems still require context, negotiation, or exceptions, meaning human agents remain important to provide judgment and flexibility that automated systems cannot match.
Reduced human staffing can also lengthen customer resolution times for non-standard issues, likely leading to repetitive contacts, complaints, and regulatory attention in sectors with strict compliance needs.
Customers are now also expecting reliable access to a person when needed, so removing that option completely can lower satisfaction and harm retention, especially during high-stress or high-value interactions.