AI Deployment and Job Displacement
The GenAI Divide: State of AI in Business 2025, a new report published by MIT’s NANDA initiative, reveals that while generative AI holds promise for enterprises, most initiatives to drive rapid revenue growth are falling flat.
Despite the rush to integrate powerful new models, about 5% of AI pilot programs achieve rapid revenue acceleration; the vast majority stall, delivering little to no measurable impact on P&L. The research—based on 150 interviews with leaders, a survey of 350 employees, and an analysis of 300 public AI deployments—paints a clear divide between success stories and stalled projects.
As an unidentified CIO put it in an interview with the authors, “We’ve seen dozens of demos this year. Maybe one or two are genuinely useful. The rest are wrappers or science projects.”
One thing that is changing is the employment landscape, at least in affected industries. In the Technology and Media sectors, the report notes, “[more than] 80 percent of executives anticipate reduced hiring volumes within 24 months.”
According to the authors, the GenAI-driven workforce reductions have been occurring in non-core business activities that often get outsourced, such as customer support operations, administrative processing, and standardized development tasks.
Madison Mills (via Hacker News):
“There doesn’t seem to be any layoffs. … Jobs most impacted were already low priority or outsourced,” Aditya Challapally, research contributor to project NANDA at MIT, tells Axios.
Instead of replacing workers, organizations are finding real gains from “replacing BPOs [business process outsourcing] and external agencies, not cutting internal staff,” according to the report.
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For now, companies aren’t firing employees but just canceling contracts that involve outsourced labor, a strategy that’s leading to financial gains.
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95% of organizations investing in generative AI are getting zero return on that investment.
Microsoft CEO Satya Nadella addressed growing internal unease at the company Thursday morning in a company-wide memo that acknowledged the “uncertainty and seeming incongruence” of conducting layoffs while achieving record profits and AI investments. The tech giant has eliminated more than 15,000 positions in 2025, including 9,000 cuts in early July alone, marking one of the most aggressive periods of job reductions in Microsoft’s history.
Nadella described this as the “enigma of success in an industry that has no franchise value,” noting that Microsoft is thriving by “every objective measure” with strong market performance and record capital investments. “Progress isn’t linear. It’s dynamic, sometimes dissonant, and always demanding. But it’s also a new opportunity for us to shape, lead through, and have greater impact than ever before,” he added. Microsoft President Brad Smith said that an estimated $80 billion in capital expenditures over the past year created pressure to reduce operating costs.
In the weeks that followed those layoff announcements, claims began circulated on X that the company had also applied for upwards of 6,000 high-skilled work visas, or H-1Bs, since October, the start of the current fiscal year. While that number could not be independently confirmed, during the last fiscal year, Microsoft applied for 9,491 H-1B visas. All were approved.
Intel CEO Lip-Bu Tan (via Hacker News):
This afternoon, we reported our Q2 2025 results. We delivered revenue above the high end of our guidance, reflecting solid demand and execution across the business.
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We are implementing a plan to reduce our headcount by approximately 15%, and we plan to end the year with a global workforce of about 75,000 employees as a result of workforce reductions and attrition. We completed a significant amount of our workforce reductions in Q2, streamlining the number of management layers by about 50% in the process.
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We will focus our AI efforts on developing a cohesive silicon, system and software stack strategy. In the past, we have approached AI with a traditional, silicon- and training-centric mindset. This needs to change – and we have already started incubating new capabilities while attracting new talent.
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The only companies laying people off and replacing them with AI right now are the ruthless, shortsighted companies that always do this sort of thing anyway.
If anything is a bubble in AI, the idea that skilled workers can be replaced with it is that bubble. And very often that skill is just being an actual human.
Frankly at this point if anyone's job really can be better done by an AI they deserve for that job to be replaced, ideally not by firing them but by changing their role to be something only a human can do.
Of course once they start putting these things into capable robots we are all fucked.
