Enterprises are cutting back on entry-level roles for AI – and it's going to create a nightmarish future skills shortage

Enterprises are cutting back on entry-level hires at an alarming rate, which experts warn could create significant long-term skills shortages.

In a survey conducted by IDC on behalf of Deel, 66% of enterprises revealed they expect to slow entry-level hiring while 91% reported that roles are already changing or disappearing due to AI.

Media, retail, healthcare, professional services and logistics are the industries most affected, the survey found.

“AI is no longer emerging, it’s fully here. It’s reshaping how we work and how businesses operate,” said Nick Catino, global head of policy at Deel.

“Entry-level jobs are changing, and the skills companies look for are too. Both workers and businesses need to adapt quickly. This isn’t about staying competitive, it’s about staying viable.”

Virtually all of the organizations surveyed have at least started exploring and implementing AI, despite the fact they’re reporting significant problems with talent pipelines.

With AI taking over repetitive and knowledge-based tasks, this means there's a shortage of candidates with the necessary skills for higher steps on the ladder.

Just under seven-in-ten survey respondents said there are now fewer on-the-job development opportunities for junior employees, while 71% reported increasing difficulty in recruiting and training future leaders because of the loss of entry-level learning pathways.

Similarly, nearly half (43%) cite a shortage of skilled AI talent as a big problem. Half of all employers are now willing to pay AI specialists 25% to 100% more than comparable tech roles.

They're also offering extra incentives, with half offering access to cutting-edge tools and 43% promising well-defined career paths.

Enterprises are evolving to compensate

Meanwhile, organizations are restructuring to try and improve matters, with nine-in-ten saying they've experienced role changes or displacement and 34% undergoing significant workforce restructuring to integrate AI.

Two-thirds of respondents are already investing in AI training programs to upskill workers and future-proof their teams.

However, 57% are finding limited employee engagement in training, 51% face budget constraints, and 45% struggle to find expert trainers.

Notably, respondents said it’s unclear who holds responsibility for AI reskilling in many companies, with only 3% having established cross-functional teams to coordinate initiatives, and 29% admitting they don’t know who owns the process.

A grim outlook for entry-level workers

The survey results mark the latest in a series of gloomy future predictions for graduates this year, and with enterprises changing recruitment practices things could get worse.

Just 5% of organizations now view a degree as essential for entry-level roles, for example. Instead, the top three requirements for entry-level talent are technical certifications in AI tools or coding bootcamps, problem-solving and critical thinking abilities, and strong communication and collaboration skills at 51%.

"Artificial intelligence is reshaping the global workforce at an unprecedented pace, outstripping any recent technological shift,” said Chris Marshall, vice president for AI in Asia Pacific, IDC.

“Organizations that will thrive are those that unite automation with a human-centered vision – investing in upskilling, redefining entry-level opportunities, and ensuring that governance and ethics evolve in step with innovation.”

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