Surging AI adoption rates are creating an unprecedented skills shortage

The rapid explosion of AI has created the UK's biggest and fastest growing tech skills shortage in more than 15 years, according to new research.

Findings from the latest Nash Squared/Harvey Nash Digital Leadership Report shows that nine-in-ten technology leaders across the country are now either piloting AI or investing in development projects.

This sharpened focus on adoption and implementation is causing issues with regard to talent, however, with half revealing they are now contending with a significant AI skills shortage - marking a 20% increase on last year.

Yet despite facing talent shortages, only four-in-ten organisations are upskilling current staff to compensate, the study noted.

“As AI continues to accelerate, the scale of the skills challenge is becoming clear. UK businesses have a pressing need to ensure their technology teams are equipped with the skills to leverage AI to full effect, or the implementations they are making could fall short," warned Bev White, CEO of Nash Squared.

"As AI is so new, there is no ‘playbook’ here – it’s about a mix of approaches including formal training where available, reskilling IT staff and staff outside of the traditional IT function to widen the pool, on-the-job experimentation, and knowledge sharing and transfer."

Bullish enterprises are pushing ahead with hiring

The organizations that are furthest ahead with large-scale implementations are 21% more likely to be increasing their tech headcount than the rest, mostly in the areas of AI and data.

Notably, while UK tech leaders said they expected one-in-seven of their technology jobs to be carried out by AI in the next five years, the report found that AI isn’t replacing people, it’s simply changing the kind of people leaders want to hire

Almost two-thirds of UK tech leaders, for example, said they'd choose an AI-skilled software developer with just two years’ experience over one with a five-year career but no AI skills.

In other areas of tech, with the number of cyber attacks in the UK increasing once again, demand for cyber skills is surging, with Nash Squared recording a 43% increase since last year's report.

When it comes to software engineers, though, there was actually a decline in demand, down by 8%. The report suggests that with software development the most widely adopted use case for AI, the technology is finally plugging a long-standing skills gap.

Salaries are rising

Rates of pay are also improving across the sector, the study found, particularly among senior staff. More than half of UK tech leaders said they had received a salary increase in the last year.

Of those that pulled in a pay rise of 10% or more, three-quarters had a CEO who's significantly more focused on technology making money for the organization, rather than saving it.

"AI is front and center of most organizations’ technology plans – and it’s encouraging to see that the UK businesses that are the furthest ahead also have the biggest people need. Rather than killing jobs, AI is changing them and creating new working models," said Andy Heyes, managing director of Harvey Nash, UK&I and Central Europe.

"It is also spilling over into a higher likelihood of pay rises, on average, for technology leaders. AI is changing the technology industry and the people dynamics within it, creating new fields of opportunity for those that embrace the challenge."

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