Are you guilty of 'AI washing'?

OpenAI CEO Sam Altman has sounded the alarm on AI washing by organisations, a practice where employers use AI as a scapegoat reason for layoffs that are unrelated to the technology.

Altman, at the India AI Impact Summit in February, warned that organisations are falsely blaming AI for reductions in their headcount.

"I don't know what the exact percentage is, but there's some AI washing where people are blaming AI for layoffs that they would otherwise do, and then there's some real displacement by AI of different kinds of jobs," Altman said in an interview with CNBC.

Is 'AI washing' real?

This is not the first time that employers are accused of practising AI washing, with a Forrester report in early February saying organisations are confusing their financially driven layoffs with AI-driven layoffs.

"Many companies announcing AI-related layoffs do not have mature, vetted AI applications ready to fill those roles, highlighting a trend of 'AI washing' – attributing financially motivated cuts to future AI implementation," Forrester said.

The allegations come in the wake of contradictory reports of AI's impact on employment, with some leading business leaders saying the technology is expected to reduce a significant number of employees in organisations, including entry-level roles.

There is also previous research indicating that organisations have cut roles and replaced them with AI tools.

In fact, data from Challenger, Gray, and Christmas revealed that AI has been cited in nearly 80,000 job cut announcements since 2023.

However, the report also noted that some cuts that are being announced by chief executives may be "due more to overhiring and reducing layers than to the new technology."

Recent analysis from the Yale Budget Lab, which looked at population survey data from the US Bureau of Labour Statistics, further highlighted that measures of exposure, automation, and augmentation show "no sign of being related to changes in employment or unemployment."

Why blame AI?

Leaders online are attributing the trend of AI washing to corporate leaders' inability to be accountable when reducing headcount.

"Layoffs happen because companies overhired, growth did not show up, margins got tight, or someone needs to make a quarter look better. AI is just the cleanest label to stick on the announcement," said Adam Honig, CEO at Spiro.ai, on LinkedIn.

"Using AI as both the scapegoat and the victory lap is not leadership."

David Linthicum, a thought leader on AI, said organisations are turning to the AI narrative because it is "palatable, futuristic, and attracts legal less scrutiny."

According to Linthicum, the practice allows employers to sidestep accountability for earlier decisions, such as hiring too rapidly over the past years.

"AI offers plausible deniability, letting leaders avoid responsibility for misjudged workforce planning," he said on LinkedIn.

Impact of AI washing

But the practice of AI washing risks giving employees another reason to distrust their leaders in the wake of rapidly changing headcount.

Jack Dorsey, founder of financial services provider Block, is becoming the subject of suspicions of AI washing after announcing that Block is cutting 4,000 employees.

This is a reduction of its workforce by nearly half, with Dorsey attributing the major change to technology.

"Intelligence tools have changed what it means to build and run a company," he said in a letter to shareholders. "We're already seeing it internally. A significantly smaller team, using the tools we're building, can do more and do it better. And intelligence tool capabilities are compounding faster every week."

But Zachary Gunn, a senior analyst at Financial Technology Partners, believes there's another reason for the cuts.

"When I look at the overall employee number, this is more about the business being bloated for so long than it is about AI," Gunn said as quoted by The Los Angeles Times.

Linthicum warned that AI washing might save face in the short term, but undermines the long-term relationship between corporations and their people.

"Framing layoffs as the direct result of AI innovation glosses over significant truths," he said.

Employers can avoid accusations of AI washing during workforce changes by taking a few straightforward steps:

• Explain concretely what has changed in the work, rather than simply attributing it to AI.
• Acknowledge the other drivers alongside AI, such as overexpansion, cost pressures, or strategic shifts.
• Show your work on mitigation: how you have tried to redesign roles, redeploy people, or reskill affected employees.

Linthicum underscored the importance of honesty for organisations seeking to reduce their headcount.

"Employees, especially, deserve honesty about why their jobs are on the line. Investors and customers, too, have a stake in understanding whether a company is truly modernising or simply paring back to recover from past oversights. The lack of clarity is not just disappointing, but disingenuous, eroding trust across all stakeholders," he said.

"Let's demand and practice more candour. AI undoubtedly will reshape the future of work in profound ways, but right now, most corporate layoffs are less about automation and more about balancing the mistakes of yesterday.

"By facing that reality head-on, we can make better decisions—and build a more trustworthy business culture for the years ahead."