HR Tech and AI: Fosway’s insights on the gap between hype and reality

HR Tech and AI: Fosway’s insights on the gap between hype and reality in summary:

Industry analyst Fosway report that artifical intelligence (AI) in HR is mainly being used to improve efficiency rather than deliver full transformation. Most organisations apply AI to automate repetitive tasks, speed up processes, and reduce errors, particularly in recruitment and learning. However, adoption remains challenging, with many businesses struggling to achieve significant productivity gains or align AI initiatives with clear business outcomes.

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If you attended HR Tech this year, there was one topic that was pretty much inescapable: AI.

Every platform was suddenly “AI-powered”. Every product roadmap promised transformation. AI – it seems – is now the quintessential bit of kit every business needs to thrive. Some vendors even put lovely, shiny robots at the front and centre of their stands – how quaint! And HR leaders? Well, they’re all being asked the same question in their c-suites: what are we doing about it?

The messaging was clear: Not using AI in your HR team? Well, you’re missing out. But step away from the hype for a moment, and a very different picture starts to emerge.

Sure, artificial intelligence may be considered de rigour in the world of work right now, but its impact – up until now at least – hasn’t exactly been universally embraced. Instead, it’s arrival has been met with a mix of scepticism, pressure, and genuine uncertainty about what meaningful AI adoption really looks like. And that’s a problem.

Used thoughtfully, AI in HR absolutely has the potential to improve how organisations operate: reducing admin, speeding up processes, and helping overstretched people teams work more effectively. However, it appears the reality on the ground is far more cautious, complex, and operationally focused than the transformation narrative many vendors are pushing.

It was this disconnect between hype and reality that caught my attention at this year’s HR Technologies UK Show. During a thought-provoking talk, Fosway Group founder and CEO David Wilson shared findings from the latest HR Realities Research (Nov 2025), and the key takeaway was clear: HR isn’t in the middle of an AI revolution. It’s navigating a reality check.

HR is under more pressure than it has been in years

Now, before we even get to AI, it’s worth understanding the environment HR is operating in.

The biggest business challenges haven’t changed. Unsurprisingly, performance and profitability still top the list – just as they have for the past decade. But what has changed is the intensity. David explained how Fosway’s research highlighted how economic pressure is now hitting HR teams hard, with more than half reporting significant strain on their budgets.

That pressure is already translating into real-world decisions. Headcount reductions are at a ten-year high, and around half of HR teams expect further cuts over the next 12–18 months.

And frankly, many HR teams were already stretched before AI entered the conversation!

In our recent HR Under Pressure report, 64% of HR professionals said stress and pressure were their “constant companions”, while an alarming 93% reported experiencing burnout in their roles. So, while AI might dominate headlines, the day-to-day reality for most HR leaders is much more grounded: deliver more value, with fewer resources, under tighter scrutiny.

If you’re under pressure to do more with less, this quick online guide on outlines 6 practical ways to streamline processes without adding complexity.

The strategic ambition is the same… but the context has shifted

If you’ve worked in HR for any length of time, this won’t surprise you: becoming a more strategic business partner remains the number one priority. And spoiler alert: it’s been there for years.

What is changing, though, is how success is being measured. David explained how their data showed there’s a noticeable shift away from softer metrics – like employer brand, wellbeing, and even DEI – towards harder, business-aligned outcomes; like profitability and the strength of internal talent pipelines.

That shift matters because it reframes HR’s role. Engagement and culture still matter, of course, but HR is increasingly being judged on its ability to demonstrate measurable business impact. If you’re keen to learn more about how to do that, then check this out.

HR Tech and AI: more optimisation than transformation

Here’s where the hype around AI starts to unravel. Yes, AI adoption is growing. Yes, organisations are experimenting. And yes, most HR teams can see clear potential. But the reality? It’s far more incremental than transformational.

At the moment, most organisations are adopting AI in HR for practical gains rather than bold innovation. For many teams, that simply means speeding up processes, reducing manual effort, and making day-to-day operations run more smoothly. In other words, it’s about doing the same work… just a bit faster and with fewer errors. Now obviously, that’s valuable. But it’s not exactly a revolution, is it?

In fact, David showed that Fosway’s research found only around one in three organisations report significant productivity gains so far. For many, the benefits are modest, and in some cases, still unclear. So, while the narrative might be about transformation, the lived experience is closer to practical automation.

Adoption isn’t smooth, and most organisations are struggling

If getting the best out of AI in HR feels harder than expected… well, that’s because it is.

David discussed how Fosway’s data proved only a small minority of organisations have implemented AI without challenges. The vast majority report at least some level of difficulty – from integration issues and data quality concerns to capability gaps and unclear use cases. Now, it could be argued that these types of issues are to be expected. After all, AI in the world of work is still in its infancy; but, there’s also a sense that some businesses are moving too quickly.

The pressure to “do something with AI!” is leading to decisions being made before organisations fully understand what they actually need, or what success looks like. The result is experimentation without direction, and investment without clear returns.

If AI is to be successfully embraced by people teams, organisations must first understand what they’re actually trying to improve.

Where AI is actually gaining traction

Despite those challenges, David highlighted how some clear patterns are emerging. AI adoption is strongest in areas like:

• Recruitment, where automation and AI augmentation are already delivering value
• Learning and development, particularly around content generation and personalisation

These are processes that are:

• High volume
• Data-rich
• Easier to augment without major structural change

By contrast, more complex, system-heavy areas – like core HR platforms and payroll – are still lagging behind.

HR tech is still falling short… and organisations know it

Alongside the AI conversation, there’s a more fundamental issue bubbling away: dissatisfaction with existing HR systems.

Around 70% of organisations are unsure (or don’t believe) their current HR systems are fit for the modern workforce. Fewer than one in three think their technology truly meets the mark. For businesses investing heavily in digital transformation, that’s a serious disconnect.

That also helps explain why many organisations are rethinking their approach altogether. There’s a growing shift towards more consolidated HR tech ecosystems – not necessarily because it’s fashionable, but because fragmented systems simply can’t deliver the efficiency and visibility businesses now need. User experience, integration, and data flow are becoming just as important as functionality.

If you don’t think your current HR system is doing the business for you, download our HR Software Selection Checklist to ensure your next HRIS is fit for the challenges of today and tomorrow.

What comes next: evolution, not explosion

Looking ahead, Fosway’s data points to a few clear priorities. Skills and strategic workforce planning are rising rapidly up the agenda. AI agents are emerging as the next major area of experimentation. And in some areas – like payroll – the expectation is a move towards increasingly “low touch” operations.

But none of this points to an overnight transformation. If anything, it suggests HR tech is evolving gradually. And given the pace of change, that may actually be the smarter approach.

So, what should HR leaders do now?

If there’s one takeaway from all of this, it’s that chasing transformation narratives is unlikely to pay off in the short term.

David believes a more pragmatic approach to HR tech and AI is emerging:

• Focus on clear, practical use cases where AI can deliver immediate value
• Prioritise integration and data quality before layering on more tools
• Align technology decisions with business outcomes, not trends
• Build internal capability alongside any new technology investment

Because right now, the organisations seeing the most value aren’t the ones chasing the most advanced AI. They’re the ones getting the fundamentals right.

There’s little doubt AI will absolutely reshape HR over time. But during his talk, David showed how it’s being shaped just as much by economic pressure, organisational complexity, and the ongoing struggle to make HR more strategic. Of course, that might not be as exciting as the headlines suggest… but it’s a far more useful place to start.