GenAI, Agentic AI Transform German Work Practices – ISG –November 17, 2025
Slowing growth and persistent skill shortages are prompting enterprises in Germany to adopt new workplace models centered on flexibility and autonomous AI systems, according to a new research report published today by Information Services Group (ISG), a global AI-centered technology research and advisory firm.
The 2025 ISG Provider Lens Future of Work Services report for Germany finds that economic stagnation and demographic pressures have combined to create a structural labor shortage that is reshaping corporate policy and accelerating the adoption of AI-enabled work models. Enterprises are also expanding international recruitment and reskilling programs, treating global talent acquisition as a long-term strategic necessity to fill domestic skill gaps.
“German workplaces are undergoing one of the most significant transformations in decades,” said Martin Mitrega, director at ISG. “Organizations are adopting hybrid models and integrating responsible AI as long-term strategies for productivity and growth.”
Roman Pelzel, principal analyst, ISG
Hybrid work has become a permanent pillar of the German labor market, the report says. The profound shifts in work organization triggered by the COVID-19 pandemic have now consolidated into a new, stable way of working in Germany. Hybrid arrangements have shifted from temporary measures to strategic fixtures of many workplaces, with knowledge-based industries leading this trend. Companies are redesigning offices as collaboration hubs and equipping managers to lead distributed teams.
AI adoption has reached an inflection point in Germany, influencing workplace practices, ISG says. A recent survey by the Germany-based ifo Institute found that more than 40 percent of German companies use AI in their business processes and more than 90 percent see generative AI (GenAI) as critical to future business models. AI implementation is shifting from limited use to a core business priority, with investment rising in multiple sectors. Implementations of AI without IT oversight have raised concerns about AI security and governance.
Agentic AI is the next frontier for German enterprises and is rapidly emerging, the report says. Autonomous AI agents can plan, reason and execute multistep tasks with minimal human oversight. Germany’s enterprise agentic AI market demonstrates how the technology is evolving from a tool to a collaborative team member. Major automotive operations such as Mercedes-Benz and BMW already deploy agentic systems for conversational navigation and supply chain optimization, moving from task automation to end-to-end process redesign. However, this growing ambition is matched by rising caution. Trust in fully autonomous systems has declined sharply amid greater awareness of risks related to data privacy, algorithmic bias and loss of control.
“AI is increasingly seen as a driver of job transformation rather than outright replacement,” said Roman Pelzel, principal analyst, ISG Provider Lens Research, and lead author of the report. “As awareness of privacy and control risks grows, enterprises are redefining roles and skills to foster human-agent collaboration rather than full automation.”
To learn more, visit: www.isg-one.com