MIT report: artificial intelligence is already replacing outsourcing in the US, but there will be no mass layoffs due to AI yet

Artificial intelligence has not yet led to mass layoffs in the United States, but it is increasingly displacing jobs that companies are outsourcing or outsourcing overseas, according to the State of AI in Business 2025 report published by the Massachusetts Institute of Technology (MIT), Axios reports.

The researchers found that the impact of AI is felt most by business process outsourcers and external agencies, while employees may not be worried about their jobs yet. “We’re not seeing mass layoffs… The hardest hit are tasks that were already secondary or outsourced,” said Aditya Challapalli, head of the Connected AI group at MIT Media Lab.

This is already delivering tangible savings for companies. One organization is saving $8 million per year by using an AI-based tool that costs just $8,000 instead of outsourcing. Other companies have reported cost savings of $2–10 million by eliminating outsourced services.

The study also notes that in the short term, AI can replace only about 3% of jobs. However, in the long term, almost 27% of professions are at risk. The industries that are actively implementing AI, in particular the technology sector and media, are experiencing the fastest changes. More than 80% of executives in these industries expect to reduce hiring in the next two years.

However, most companies are currently using AI for backfilling (replacing individual tasks) rather than for staff reduction. The most obvious effect is in back-office automation, while the largest investments are in front-office solutions - marketing and sales tools, the effectiveness of which is more difficult to assess.

For investors, the MIT report is both alarming and encouraging. While 95% of companies investing in generative AI have yet to see a direct return on their investment, many are already seeing “significant productivity gains.” If AI can help businesses cut costs without causing massive layoffs, it could be an “ideal scenario” for the economy: companies’ profits will rise while avoiding the negative effects of mass layoffs.