87% of business leaders think AI agents will replace human employees if companies don’t make big moves to upskill their workforce

A recent KPMG survey indicates that 87% of business leaders believe AI agents will displace human employees unless companies significantly upskill their workforces, a concern underscored by the tripling of AI agent deployment since Q4 last year and direct statements from major CEOs about leaner human workforces. While 82% of leaders expect AI agents to become valuable contributors and transform the business landscape within two years, a significant gap exists in corporate upskilling efforts despite strong employee demand for AI training. This highlights a critical strategic imperative for companies to invest in human-centric change management and proactive upskilling to realize long-term AI ROI and mitigate widespread job displacement.

Analysis

A recent KPMG survey reveals a significant disconnect between the rapid adoption of AI and corporate readiness for its workforce implications. While AI agent deployment has tripled since Q4 of last year and 82% of business leaders anticipate transformation within two years, a stark 87% believe this will lead to worker displacement without substantial upskilling initiatives. This trend is not merely theoretical; it is actively being executed by major technology firms. Duolingo (DUOL) now requires management to prove a task cannot be automated before authorizing a new hire, and Meta (META) is proceeding with plans to replace up to 90% of its human staff in specific risk review roles with AI. These actions, reflected in the negative sentiment scores for both tickers, signal a strategic pivot towards leaner human workforces to boost efficiency. However, a critical execution risk emerges from the gap in workforce development: while 79% of employees desire AI training, a majority (57%) find company efforts inadequate, and only a third of firms have established clear policies for AI usage. This failure to invest in human capital alongside technology presents a material risk to realizing the long-term ROI of AI, potentially leading to operational disruptions and reputational damage.

Key Decisions for Investors

• Investors should scrutinize companies' human capital strategies alongside their AI technology roadmaps, as firms with well-defined and funded upskilling programs are likely better positioned to manage the transition and sustain long-term value creation.
• For companies like Meta and Duolingo that are aggressively substituting labor with AI, watch for potential near-term margin expansion from lower payroll costs, but remain vigilant for operational or ethical risks that could arise from such rapid workforce changes.
• Consider that the broad theme of AI-driven labor displacement introduces both opportunities in tech-forward companies and systemic risks to the wider economy, warranting a portfolio approach that balances exposure to AI leaders with a cautious view on sectors vulnerable to significant labor disruption.