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Two years back, I wrote an article about “The impact of AI on the cost of starting and running a business”, highlighting two potential consequences of AI for business operations:
Firstly, considering a fixed target output (users, revenue, growth etc.), the input and required resources can be reduced. This would mean less hiring, less replacements and more lay-offs to reduce the workforce. Secondly, considering a fixed input (workforce), the output can be increased. In this scenario, it’s questionable whether there will be natural limits to growth. In any case, both scenarios mean more efficient operations.
The article has triggered a fun conversation with my friend , the author of and - one of the leading experts when it comes to finance and operations. We continued our discussion about potential implications of AI on finance and ops in his podcast here.
Fast forward to today, two years later with a lot more clarity about the implications of AI, I’m excited to have CJ contribute a guest post about the actual implications of AI for operators. Hands-on, full of value that you can implement tomorrow.
Let’s jump right in!
The Hype vs. the Harvest
Most AI commentary in VC land centers on product differentiation, new GTM angles, and market expansion. That’s amazing. Who doesn’t love revenue?
But if you're a CEO or CFO inside a PE-backed portfolio company, you don't care about vision decks. You care about free cash flow.
This post is about how operators—not founders, not futurists—are deploying AI to reduce costs, reassign headcount, and improve internal performance. These are tactical, vendor-backed deployments inside real companies where capital efficiency is the point—not a side benefit.
Based on conversations with over 40 CFOs and firsthand implementations across multiple portcos, here’s what’s actually working.
AI for Ops: Headcount Cuts vs. Efficiency Gains
Source: Looking for Leverage
Companies are using AI in two very different ways across internal ops:
Headcount Reducer – Replacing repetitive, structured work (think: high-volume, low-variance tasks).
Efficiency Booster – Augmenting existing teams so juniors can perform like mids, and mids like seniors (think: steroids)
Knowing which bucket a tool falls into helps you model costs, reassign headcount, and avoid overpromising.
1. AI is Cutting Headcount in Highly Repetitive Roles
These are the clearest direct cost-saving use cases where AI is outright replacing jobs:
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