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ServiceNow has announced ambitious plans to reduce global headcount expenses by $100 million in 2025 through aggressive internal deployment of AI tools. The revelation came during its Q2 earnings call, where the company reported a 22.5% year-on-year revenue jump to $3.2 billion and a 47% surge in net income ($385 million). CFO Gina Mastantuono confirmed the savings target—first hinted at May’s Knowledge conference—is "coming to fruition as planned."

"We're 100% seeing the efficiencies. I'm reserving the opportunity to lean into investments because the AI opportunity is so massive," Mastantuono told analysts.

Crucially, these savings won’t translate to fatter margins. Instead, ServiceNow will redirect funds toward hiring more sales and engineering staff to support customer demand for its AI products, including its pending acquisition of AI assistant builder Moveworks. Mastantuono emphasized ongoing "investment for growth to meet demand for AI transformation," suggesting a strategic workforce reshuffle rather than pure cost-cutting.

This mirrors moves by other SaaS giants:
- Salesforce CEO Marc Benioff recently stated AI handles 30-50% of tasks internally, urging staff to focus on "higher-value work."
- Workday cut 8.5% of its workforce (1,750 jobs) in February, with CEO Carl Eschenbach citing AI-driven restructuring to "align resources with customers’ evolving needs."

The Productivity Paradox

While executives tout AI’s potential, studies reveal complexities:
- AI agents still fail at ~70% of office tasks according to industry data
- Coding assistants often make developers slower despite perceived efficiency gains
- Call center AI tools frequently struggle with contextual understanding

ServiceNow’s pivot highlights a delicate balancing act: harvesting AI efficiency gains while reinvesting in human capital for strategic growth. As Mastantuono noted, the savings enable "prudent expense management" amid potential headwinds, including the Moveworks acquisition. For technical leaders, this signals that enterprise AI’s real value lies not just in automating tasks, but in funding the talent required to harness its next wave.

Source: The Register