90% of U.S. technology leaders are using AI to increase output without reducing engineering headcount, while 75% globally say a strong engineer is worth at least 3x their compensation
AI is increasing the capacity of engineering organizations, but technology leaders are largely using those productivity gains to build more rather than reduce headcount or lower costs, according to new research from Karat conducted by The Harris Poll.
The 2026-2027 AI Workforce Transformation Report, which includes exclusive insights from industry leaders such as Sagnik Nandy, CTO at Docusign, David Lau, Vice President of Workload Scaling at OpenAI, and Mala Singh, Chief People Officer at Electronic Arts, finds that 90% of U.S. technology leaders are using AI to produce more while maintaining or expanding engineering headcount. Just 10% say they are maintaining current output with fewer engineers.
Read the full 2026-2027 AI Workforce Transformation Report
AI is creating capacity, not eliminating work
The research points to a dynamic consistent with the economic concept known as Jevons paradox. As technology makes code easier to produce, organizations are responding by producing more software rather than reducing engineering resources or cutting costs.
Among U.S. technology leaders, 82% report increased product and feature volume as a result of AI. But greater output does not automatically mean faster delivery. Sixty-seven percent report an increase in the time required to bring new features to market, while 44% report an increase in coding errors.
Engineering work is also shifting. As AI takes on more coding responsibilities, engineers are spending more time reviewing AI-generated outputs, refining requirements, designing systems, testing, and managing the risks surrounding increasingly abundant code.
AI is stretching the engineering performance curve
Rather than acting simply as an equalizer, AI is increasing the leverage of the strongest engineers.
In addition to the 75% of global technology leaders who now value a strong engineer at three times their compensation or more, organizations are increasing investment in senior individual contributors and upskilling, while entry-level engineering roles face greater pressure.
"The most impactful engineers are increasingly applying skills we once associated primarily with engineering leaders," said David Lau, Vice President of Workload Scaling at OpenAI. "They're constantly asking how best to combine the strengths of AI agents and human collaborators, structuring work so that each multiplies the impact of the other, and defining success criteria and work products that let agents demonstrate that they've achieved the desired outcome."
As AI increases the leverage available to each engineer, talent quality is becoming more consequential across the broader workforce. Fifty-seven percent of U.S. technology leaders say they are very satisfied with the quality of their full-time engineers, compared with 38% who say the same about contractors. Meanwhile, 51% expect contractors to use AI to deliver more output at roughly the same cost.
AI is changing the economics of software development
AI also introduces new costs into the engineering workforce. Models, agents, tokens, coding tools, and compute increasingly sit alongside compensation, benefits, and other traditional workforce expenses.
Three-quarters of U.S. technology leaders say they consider an engineer's total cost, including AI usage, when making workforce decisions, and 74% say they actively optimize AI spending at the individual engineer level.
What leaders have less visibility into is how those investments compare with the market and translate into business value.
Nearly three-quarters of U.S. technology leaders believe their organizations are ahead of their industry in their ability to leverage AI, including 13% who say they are significantly ahead. Just 5% believe they are behind.
At the same time, the metrics technology leaders report to CEOs and CFOs remain weighted toward inputs and operational measures. Seventy-three percent report technology spend versus budget, compared with just 42% who report product or feature revenue.
The research also finds a relationship between workforce AI readiness and reported returns. Among organizations where technology employees are considered very prepared to use AI in their day-to-day work, 89% say at least half of their engineers are seeing meaningful ROI from AI tools. That falls to 65% among organizations whose employees are not considered very prepared, a 24-point gap.
Together, the findings point toward a new management challenge for CIOs and CTOs: understanding not simply how much AI their engineers use, but which combinations of talent and technology create differentiated capability, what that capability costs, and where it produces measurable business value.
About Karat
Karat is the talent elevation partner that helps technical leaders transform their workforce for the Human+AI era. Trusted by some of the world's largest payment companies, tier 1 banks, and global tech enterprises, Karat evaluates and benchmarks engineering talent rigorously, consistently, and at scale. Our system turns those evaluations into insights that help leaders build a more capable and competitive workforce. Karat interviews combine best-in-class methodologies with live, AI-native scenarios, delivered by experienced Interview Engineers. With intelligence from more than 600,000 technical evaluations, Karat gives leaders a clear view of workforce capability, a competitive benchmark, and confidence that their standards are being met. Learn more at karat.com.
About the 2026-2027 AI Workforce Transformation Report
Karat's 2026-2027 AI Workforce Transformation Survey, conducted by The Harris Poll, surveyed 157 technology leaders across the United States and China who are involved in AI and technology workforce planning. The research examines how AI is changing engineering work, workforce composition, talent value, contractor economics, compensation, AI spending, and the measurement of engineering ROI.
The complete findings and analysis are available in Karat's 2026-2027 AI Workforce Transformation Report: https://karat.com/resource/ai-workforce-transformation-report/
View source version on businesswire.com: https://www.businesswire.com/news/home/20261008972881/en/
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Press Contact
Gordie Hanrahan
Sr. Director Communications
press@karat.com
