Headcount Growth and Compensation Slow After Several Years of Expansion
Conversely, Gartner’s latest 2026 budget benchmarks, based on an October 2025 survey of more than 300 CFOs and finance leaders, show that HR faces the sharpest pullback, with only 29% of CFOs planning increases and 22% expecting cuts, reducing average budget growth from 2.4% in 2025 to 0.7% in 2026 due to reduced hiring and AI efficiency gains. (see Figure 1).
Figure 1: Planned Changes to Functional Budgets in 2026
Source: Gartner (February 2026)
Enterprises Bet on Technology over Headcount
At the same time, after years of compensation-led budget growth, the tide is turning. Pay increases have slowed for three consecutive cycles, dropping from 6.1% in 2024 to 5.4% in 2025, and the moderation will deepen to 4.5% in 2026.
“The real story, however, lies in collapsing headcount growth expectations, from 6% in 2025 to just 2% in 2026 with just 21% of CFOs planning staff increases of 4% to 9%, down from 31% last year,” said Abbasi. “This marks a structural pivot from labor expansion to optimization driven by automation and AI that deliver productivity gains without proportional increases in headcount.”
Finance AI Adoption Moves from Pilot to Scale
AI spending remains in early stages for most, with 47% allocating just 1% to 5% of finance technology spend to AI, but confidence is growing as organizations report early wins in automation and forecasting.
“CFOs recognize that AI is no longer just an experiment—it’s fast becoming a core enterprise capability,” Abbasi added. “The shift from cautious pilots to committed scale is driven by tangible gains in productivity and decision-making. As AI literacy grows and legacy systems are modernized, we expect to see accelerated investment and deeper integration across finance and the enterprise.”
