Dive Brief:
- More than 50% of customer service teams will double their technology spend by 2028, but the increased investment won’t be offset by a headcount reduction, according to a prediction released last week by Gartner.
- Automation can’t replace human agents without the risk of operational disruption and a worse customer experience, Gartner says. Companies also run the risk of expensive rollbacks should they reverse course and return their focus to human-led service.
- “Moving too quickly can actually increase costs in the short term — especially if you need to rehire or backfill critical roles,” Emily Potosky, senior director analyst at Gartner, said in an email. “More importantly, premature cuts can undermine your ability to reorganize your function for long-term value creation and growth.”
Dive Insight:
Leaders looking to AI as a way to cut workforce costs shouldn’t underestimate the costs associated with new technology or the risk of downsizing human staff, according to Potosky.
Beyond the cost of the technology itself, businesses must consider the costs associated with licensing fees, setup and training, integration and usage, according to Potosky. Additionally, companies will need to hire new talent, including data analysts and knowledge management roles, and invest in the necessary infrastructure to make the most of new technology.
“Many of the leaders we talk to have substantial technical debt, alongside outdated knowledge and data management practices,” Potosky said. “They will need to dedicate funding to modernizing their infrastructure, or fail to get positive ROI.”
Leaders shouldn’t give into pressure to quickly reduce their customer service headcount, according to Potosky. Fast cuts can lead to worse service quality, harm to the brand’s reputation, and legal disputes or financial penalties in operating environments with unions or labor labor regulations.
“Beyond that — there is no guarantee that organizations that pursue rapid headcount reduction will be able to keep headcount low in the long run,” Potosky said. “There have been some very public examples of organizations that reduced their workforce too quickly and had to rehire employees as a result.”
One example is Klarna. The buy now, pay later company went all in on AI in 2024 before partially reversing its plans a year later with an emphasis on ensuring customers always have the option to speak with a human.
Research has found that consumers are pessimistic that live agents will continue to have a primary role in call centers.
Nearly half of consumers believe that within 10 years they will no longer directly interact with companies because an AI agent will do it on their behalf, according to Medallia research.
That doesn’t mean the human touch will disappear altogether. Some experts and consumers expect human service to become a feature of premium or luxury experiences.
