The human touch: A CIO's wake-up call on customer service AI

AI is deeply embedded in customer service departments. But while many businesses may see this technology as a cost-saving measure, it doesn't always elicit satisfied customers and may not be as profitable as initially thought.

Good customer service requires respect for customers and their time, empathy, good communication, and a process that's easy for customers to follow to achieve the resolution they seek.

But in recent years, it's become apparent that good customer service is on the decline. Many businesses have slashed their customer service staff as AI steps in to do the work, including the following:

• Atlassian. In 2025, the company laid off a total of 350 customer service and support employees, citing that they would largely be replaced with AI.
• Klarna. Between 2022 and 2024, the company cut 700 positions -- primarily in customer service and support. In recent months, the company realized it had been too aggressive with this move and would begin rehiring staff to address the diminished service quality.
• Salesforce. In 2025, the company slashed its customer support head count from 9,000 to 5,000.
• Sky UK. In 2025, the company moved to cut 2,000 jobs at customer service centers and closed three sites.

I saw this play out in real time while trying to reach a utility company recently. My service had been up and down for nearly a week, and I'd received multiple automated messages telling me the company was working to address the problem. After the third message -- and with no visible sign that the problem was anywhere near being fixed -- I decided to make a customer service call, only to be robot-blocked and denied the opportunity to speak to a human agent. The same thing happened when I initiated a live chat via the web. Robot-blocked again.

So I headed to one of the company's field offices to speak with a human agent in person and express my frustration. He showed little empathy and said, "Do you know anyone who works in the call center?"

"I used to," I said.

"Well, how about now?" he countered.

I shook my head no, and he said, "Exactly," alluding to the fact that the company's call center was understaffed. I couldn't believe that such a large company operated on a model where it essentially eliminated human contact with customer service.

While customer service leaders may be eager to adopt AI, customers are not sold on it.

In a 2025 Verint report, 56% of respondents said they would prefer to speak to human agents over an automated system; however, 44% of those people are open to using automation if it resolves their issue.

A 2023 Gartner survey found that 64% of customers would prefer companies not to use AI for customer service matters, and 53% of customers would consider switching to a competitor if a company used AI. The No. 1 concern about AI in customer service is that it would become more difficult to reach a human being. Additional Gartner research shows that only 13% of all customer journeys begin and remain in self-service channels.

AI in call centers can produce a cost savings of up to 30%, according to research from McKinsey and Company. But at what cost? Customers expect empathy. They don't want agents to read from a script. And they want to feel like their business is valued. This is simply not something that chatbots and AI agents can provide -- and it's a reason why businesses may lose customers.

It costs more to acquire new customers than it does to retain existing customers. In fact, it can cost five to 25 times more to acquire a new customer, according to information from Business Dasher. Moreover, companies have a 60% to 70% chance of selling to an existing customer versus a 5% to 20% chance with a new customer.

A 2024 Gartner survey shows that 73% of chief sales officers planned to prioritize growth from existing customers in 2025. It also found 57% of CSOs saw account retention and growth as a top-three priority.

Clearly, customer loyalty matters.

While AI may provide cost savings, it's essential to remember that AI tools are designed to supplement human work -- not replace it entirely. Human touchpoints remain an integral part of businesses -- especially when it comes to customer service and support.

Show your employees you value and respect them by allowing AI to help them, not replace them.

And show your customers the same value and respect by understanding their need for the human touch. Always remember to give them a way out of the AI loop to a human experience.

Sarah Amsler is a senior managing editor for the IT strategy team at TechTarget.