AI boosts productivity, but CEOs struggle to turn gains into growth: Report

As companies invest more heavily in artificial intelligence, many CEOs are struggling to turn productivity gains into measurable financial results, according to a report by global strategy consultancy EY-Parthenon.

Its latest CEO Outlook Survey, which polled 1,200 executives across 21 countries, found that half identified AI as the biggest driver of productivity over the past year, ahead of business-process redesign at 46%. Yet only 16% had clear, real-time visibility into the returns on their AI investments.

Much of the challenge lies in converting those efficiencies into sustained growth. While nearly half of CEOs said productivity gains were being reinvested in innovation or transformation, close to a quarter said the gains were often absorbed by new demands and greater organizational complexity associated with the technology. Regulatory and risk requirements, legacy systems and additional workloads were also cited as factors offsetting those gains.

“AI is creating real productivity gains, but productivity alone is not a strategy,” said to Andrea Guerzoni, EY-Parthenon Global Vice Chair. “The challenge for CEOs now is to convert those gains into measurable value and competitive advantage.”

According to EY, leaders often fail to capture the full cost of AI. Beyond model fees, cloud infrastructure and data, those costs also include integration, governance and training employees to use AI effectively — factors that can materially alter the investment case.

“The leaders who will pull ahead will be those who can create long-term sustainable growth by redesigning how people and technology work together, transforming their operating models and making smart choices about where they deploy capital,” Guerzoni added.

The pressure to capture more value from AI is also changing how companies think about their workforce, with more CEOs citing AI as a workforce transformation issue rather than simply a way to change headcount.

Four in five said AI would have a greater impact on roles, skills, and ways of working than on workforce size over the next three years, as companies saw more output per employee in the last year.

But companies are struggling to develop those skills quickly enough. Nearly half of CEOs said their organizations were not keeping pace with the skills required as AI develops, while 72% expect skills shortages to become a greater barrier to growth than access to capital within three years.

That gap is also reflected in where companies are directing the benefits from higher productivity. While 33% of CEOs cited reskilling as a driver of productivity, only 15% said overall productivity gains were being reinvested in workforce development.

AI is also becoming more widely used in the deal-making process. Nearly half of CEOs said they were piloting the technology in selected transaction activities, while 45% were already using it across multiple or most parts of the process.

Among those surveyed, 45% saw the biggest opportunity in using AI to identify value earlier, while 35% pointed to improved decision-making and faster deal execution.

“Growth increasingly depends on portfolio discipline by using acquisitions, partnerships and divestments to build capability, deploy capital and respond faster,” Guerzoni said.

“But as AI reshapes business, portfolio choices cannot be made in isolation,” he added. “The real competitive divide will be between those that merely adopt AI and those that use it to create lasting value by treating technology, talent and portfolio optimization as one strategic transformation agenda,” Guerzoni concluded.