Human capital in the age of artificial intelligence: Augmentation, Displacement or Redefinition. A Sri Lankan Context.
During the past few years, the initiation
of Artificial Intelligence has risen from a mere concept to an operational
facet across all institutions and industries. Starting from Chatbots to
algorithm driven recruitment tools, stakeholders are relying on these
intelligent systems to be more effective and efficient (Úbeda-García et al.,
2025). This shift is considered inevitable, impacting sectors such as IT
services, Banking, Telecommunications, raising a critical question:
Is Artificial Intelligence strengthening
human capabilities or gradually replacing it?
Figure 2: Human AI
Interaction in Modern Organisations
Source: (Aisera, no
date)
As illustrated in Figure 1, the
integration of AI into workplace environments is increasingly shaping how
employees interact with technology and perform tasks.
Companies such as Dialog Axiata
and Commercial Bank PLC noted to be industry leaders, are indulging AI to
enhance data analytics, policymaking processes and to radically develop
productivity (Dialog Axiata PLC, 2025). Dialog Axiata has encouraged the usage of
AI Driven Chatbots, digital engagement platforms while Commercial Bank of Ceylon
has integrated its online banking facilities through automation (Commercial Bank of Ceylon PLC, 2025). While these innovations result
in streamlined operations, they also signal an imminent alteration in certain
Job Roles, particularly positions that are process driven and repetitive.
The Human Capital Theory
emphasizes that employees are considered an asset whose validity can be
enhanced through investments in knowledge and skills. However, the introduction
of AI brings in a fundamental disruption, without complementing human
capabilities, it substitutes repetitive administrative and cognitive tasks.
This switch contradicts with the ingrained belief that human capital is the
primary source of an organization’s competitive advantage (Awu et al., 2025).
Figure 2:
Fastest Growing vs Fastest Declining Jobs
Source: World Economic Forum (2023), Future of Jobs Report
The transformation illustrated in
Figure 2 emphasizes on the significance of skills over time, as process driven
tasks are on a profound decline, there is an emerging need for job roles which
require emotional intelligence, analytical thinking and data fluency (World
Economic Forum, 2023). This indicates that AI is simply not here to eliminate
jobs, but to redefine effective human capital.
This narrative clearly elaborates
that artificial intelligence will augment human roles enabling the working
populace to be more creative and strategically sound. Nevertheless, this
premise necessitates a thorough evaluation. In a plethora of organizations, the
collaboration of AI is due to cost reduction and efficiency optimization. This
could result in technological displacement swifter than personnel reskilling
creating systematic flaws in employment.
Nonetheless, the introduction of
AI cannot be considered a substitute for labor rather be considered an aspect
to redefine value. According to (Chowdhury et al., 2023) this aligns with the
Resource Based View which entails that competitive advantage stems from
inimitable capabilities rather than easily replicable high tech systems.
It is clearly evident that Artificial Intelligence is no
longer merely a technological advancement, but a strategic inflection point
reshaping all aspects of HRM. The critical decision now lies with organizations
whether to adopt AI as a tool for human empowerment or as a mechanism for
workforce reduction. The future of job roles and human capital will largely
depend on this choice, and on the extent to which organizations enable
employees to evolve alongside technological progress. This challenge is
particularly significant for emerging economies such as Sri Lanka, where the
future of the workforce will depend on how effectively organizations strike a
balance between technological advancement and employee wellbeing.
Aisera, no date. AI in the
workplace: Examples, pros and cons. [online] Aisera. Available at: https://aisera.com/blog/ai-in-workplace/ [Accessed 25 March
2026].
Awu, E., Darius, B. and Chimele, P. (2025) Human capital
theory: Viewing employees as organizational asset. International Journal of
Academic Management Science Research, 9(3), pp. 370–375. Available at: https://www.researchgate.net/publication/390399383_Human_Capital_Theory_Viewing_Employees_As_Organizational_Asset
(Accessed: 25 March 2026).
Chowdhury, S., Dey, P.,
Joel-Edgar, S., Bhattacharya, S., Rodríguez-Espíndola, O., Abadie, A. and
Truong, L. (2023) Unlocking the value of artificial intelligence in human
resource management through AI capability framework. Human Resource
Management Review, 33(1), 100899. Available at: https://doi.org/10.1016/j.hrmr.2022.100899
Commercial Bank of Ceylon PLC
(2025) ComBank launches Sri Lanka’s first AI-powered SME credit underwriting
solution. Available at: https://www.combank.lk/news/news-events/combank-launches-sri-lankas-first-ai-powered-sme-credit-underwriting-solution
(Accessed: 26 March 2026).
Dialog Axiata PLC (2025) Dialog
launches Sri Lanka’s first trilingual AI platform. Available at: https://www.dialog.lk/news/dialog-launches-sri-lankas-first-trilingual-ai-portal
(Accessed: 26 March 2026).
Úbeda-García, M., Marco-Lajara,
B., Zaragoza-Sáez, P.C. and Poveda-Pareja, E. (2025) Artificial
intelligence, knowledge and human resource management: A systematic literature
review of theoretical tensions and strategic implications. Journal of
Innovation & Knowledge, 10(6), 100809. Available at: https://doi.org/10.1016/j.jik.2025.100809
World Economic Forum (2023) The
Future of Jobs Report 2023. Available at: https://www.weforum.org/publications/the-future-of-jobs-report-2023/
(Accessed: 23 March 2026).
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ReplyDeleteAre Sri Lankan organizations using AI to truly empower employees, or just as a shortcut to cut jobs?
ReplyDeleteA Plethora of firms in Sri Lanka utilize AI in diverse ways. Some Organizations use it for Cost Reduction whilst others are adapting to AI to enhance employee productivity. Ultimately it comes down to leadership direction and intent, whether it is utilized to empower the workforce or gradually replace them.
DeleteInterested. In the age of artificial intelligence, how can organisations ensure that AI strengthens human capital rather than replaces it?
ReplyDeleteThe Key is to have an holistic Approach, a combination of Human + AI can be used in redesigning roles, enhancing employee skills and to support and strategize decisions rather than replace human capital. When properly handled Artificial Intelligence changes from a threat to an value adding tool resulting in fruitful outcomes for all stakeholders.
DeleteIn adopting AI for recruitment, performance tracking, and administrative processes, how can HR leaders strike a balance between automation and maintaining a human-centered employee experience?
ReplyDeleteA Very important question. Human Resource leaders can find the perfect balance by using AI for efficiency whilst showing emphasis towards human judgement in areas such as employee reskilling and in hiring decisions. The ultimate goal is to not replace the human experience but to use AI as a supporting platform.
DeleteIf you structure your content with an introduction and conclusion section would be great.
ReplyDeleteThank you for your valuable insights Sir. I will incorporate the introduction and conclusion sections in my future posts.
DeleteEven if AI is able to replace human involvement to a certain level, it would definitely need human interaction to oversee the proper function. Are there any existing measures that address the emotional aspects of AI in HRM?
ReplyDeleteThat's a thoughtful question. Yes, there are indeed emerging measures to tackle the emotional aspects of AI in HRM. Emotional intelligence workshops, ethical AI frameworks and Human loop systems ensure that the human aspect thrives even in circumstances mentioned above. These emerging trends aid in balancing empathy and efficiency within the human resource framework.
DeleteThanks for an interesting post on AI and human capital. My main concern is the "velocity gap"-AI adoption is occurring at an extremely rapid pace and organisations are failing to reskill employees. Do you believe reskilling would be a reality for displaced employees in Sri Lanka where investment in training is already quite poor, or would workers essentially be left behind?
ReplyDeleteThank you for highlighting the velocity gap it’s a very real concern, especially in an Sri Lankan context. Given the traditionally low investment in employee training, there is a risk that some workers may indeed be left behind. However, reskilling is likely to occur in a limited and uneven way. Larger organizations, particularly in sectors like banking and IT, are more likely to invest in upskilling, while smaller firms may struggle due to resource constraints. This suggests that without stronger collaboration between organizations, government, and educational institutions, AI adoption could widen workforce inequality rather than reduce it.
DeleteThe idea of augmentation feels most realistic for Sri Lanka right now—AI supporting workers rather than fully displacing them. But the real challenge is skills readiness. Without upskilling in digital literacy, data awareness, and adaptability, displacement becomes more likely for certain roles.
ReplyDeleteA thoughtful insight. I agree with the fact that augmentation only works if the employees are prepared to collaborate with AI rather than be replaced by it. I believe Sri Lankan organizations could start small by integrating data awareness and digital literacy into skills development and training. By doing this the adaptability aspect becomes part of the culture rather than a excess initiative.
DeleteDear Shewan,
ReplyDeleteThank you for sharing your blog. The topic is highly relevant and fits very well with contemporary debates in HRM and global business. Your discussion of human capital in the context of artificial intelligence is timely and interesting. I liked the way you connected technology with workforce development. One suggestion for improvement would be to include more critical discussion on both the opportunities and risks of AI for employees, rather than focusing mainly on one side. Adding a few more examples from real organisations would also strengthen the analysis.
Overall, this is a strong and promising blog.
Best regards.
Thank you for your thoughtful feedback Nalaka. I really appreciate your suggestion to combine a more balanced perspective of both the opportunities and risks of Artificial intelligence, as well as to include more real world organizational examples such as while AI can enhance efficiency and decision making, it can also create concerns around job displacement and skill obsolescence.
DeleteI will ensure that future blogs reflect this balance and include more applied organizational examples to strengthen the overall analysis.
Thank you once again for your valuable insights.
AI in HRM is not simply augmenting or displacing human capital but fundamentally redefining the basis of competitive advantage toward higher-order human capabilities such as creativity, critical thinking, and emotional intelligence. From a Resource-Based View (RBV), sustained organizational performance depends on how effectively firms integrate AI with continuous capability development to create inimitable human–machine synergies.
ReplyDelete
DeleteI agree with the fact that AI is not simply augmenting or replacing human capital but reshaping facets of competitive advantage such as creativity, critical thinking, and emotional intelligence. With emphasis to the Resource-Based View, the framework highlights the significance of incorporating AI with continuous skill development to create unique human machine synergies. Firms that build strategies that incorporate data driven tools with human judgment in areas like customer engagement, problem solving and decision making and are better positioned to build long term competitive advantage which will enable them to thrive in this evolving market.
Thank you for adding this valuable dimension to the discussion.
Great article! It clearly highlights how AI is transforming human capital and the growing importance of continuous learning and adaptability. A very timely and insightful read.
ReplyDeleteWhat is the most practical way organizations can quickly reskill employees without affecting current productivity?
The most practical way is through microlearning and on the job coaching. Short, focused learning modules combined with realtime mentoring allow employees to reskill quickly while staying productive in their daily roles. This way, learning becomes part of the workflow rather than a disruption.
Delete