AI skills shortages exacerbated by surging salary demands

AI costs are driving budgets up by a third, with high salary expectations making hiring a challenge.

That's according to a survey by CloudZero that revealed AI budgets are expected to jump by 36% in 2025 — reaching an average of more than $1 million annually.

This surge is partially driven by AI-skilled workers demanding higher salaries, with 35% of companies surveyed saying that salary costs are the biggest barrier to filling AI gaps in their workforce.

The race for top AI talent has accelerated rapidly over the last two years, with industry giants battling it out for candidates. Meta, for example, has reportedly spent around $100 million on signing-on bonuses to poach AI experts from Silicon Valley rivals while Google has also embarked on a huge recruitment campaign.

That's for the best in the industry, of course, with typical salaries normally topping $100,000 and a quarter earning between $150,000 and $200,000.

According to CloudZero, 32% of companies see a lack of qualified candidates as a significant challenge, and 13% admit that their own lack of in-house expertise makes it difficult to assess applicants.

The most in-demand roles were cloud computing and data engineering.

CloudZero also found that 89% of companies reported new types of jobs were being created by AI, though nearly two-thirds remained worried about job losses too.

"This shows the need to balance innovation with reskilling to navigate the evolving job landscape," the report noted.

The CloudZero survey tracks with previous research by Indeed, which predicted AI skills would offer the most lucrative job opportunities in the industry, as employees with AI skills would earn 47% higher wages than those without.

ROI vs AI costs

AI costs are skyrocketing, but despite heavy investment only half of respondents said they were confident they could accurately evaluate their return on investment (ROI).

"AI spend is going through the same hype cycle we've seen with every transformational tech shift: lots of bets, not a lot of clarity," said Erik Peterson, founder and CTO of CloudZero.

"What's different this time is the scale and speed of that spend."

Peterson said companies that can pin down their ROI and clearly tie AI to business outcomes were "doubling down" on their investment.

"Like the cloud, AI will become just another part of how every modern business runs," he said.

"When that happens, it's not going to be the biggest companies that win, it's going to be the ones with the best AI unit economics — the ones that know how to scale profitably."

According to the report, the biggest sources of costs by infrastructure type were public cloud platforms, generative AI tools, and security platforms. From 2026 onward, they intend to invest in AI explainability, security, and compute or cloud.

"In 2025, 44% of organizations plan to invest in improving AI explainability, aiming to boost transparency and accountability in AI systems, making AI models more understandable to users by clarifying how decisions are made," the report noted.

"This investment often takes the form of hiring specialized talent and integrating third-party tools that provide model interpretability."

Reports suggest that ROI from AI projects has been difficult for boardrooms to unpick, though leaders have pushed on with investing in the technology despite lacking data on the potential payoff.

Perhaps that gamble will prove sound, as Microsoft says its own data shows generative AI is now delivering an ROI of $3.70 or every dollar invested.

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