Artificial intelligence has created the UK’s biggest and fastest developing tech skills shortage in over 15 years, finds a new Nash Squared/Harvey Nash report that has been tracking the views of technology leaders since the late 1990s.

The Nash Squared/Harvey Nash Digital Leadership Report, the largest and longest running survey of technology leadership in the world, found that AI has jumped from the 5th most scarce technology skill in the UK to number one in just 18 months – the steepest and largest jump in any technology skills shortage recorded in the UK for over 15 years.

Almost three times as many UK tech leaders (52%) compared to the previous report (20%) now say they are suffering an AI skills shortage, a 114% jump. In the previous 16 years that Nash Squared/Harvey Nash has tracked technology skills shortages, the next biggest reported jump in the UK was a shortage in Big Data skills, with a jump of just 55%. Even with Cyber skills, for which demand continues to grow, the increase in scarcity has been gradual – rising from 12% in 2009 to 30% this year.

This rapidly developing AI skills shortage is closely linked to a significant growth in investment, with 89% of technology leaders in the UK now reporting they are either piloting AI or investing in small - or large-scale developments. This has skyrocketed from 46% in the previous Digital Leadership Report. Despite this steep rise, over two thirds (69%) of UK tech leaders report they have not received measurable ROI from piloting AI. Larger organisations, however, are faring better in quantifying results: 40% of larger organisations in the UK with technology budgets exceeding $500million report a measurable return.

Although AI investment has create this rapidly-developing tech skills shortage, UK technology leaders and their companies still are working on how to respond to the crisis, and the report found that over half of UK companies (59%) are not upskilling in GenAI. But it is not just a skills question: operating models will need to change as the tech team is increasingly supplemented by AI and activities like software development are revolutionised.

Bev White, CEO of Nash Squared, said:

“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. 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. This needs to coincide with the development of a new operating model where AI is stitched in. Quite simply, those organisations that rise most effectively to the AI challenge will be in the driving seat to succeed.”

AI shaping investment decisions:

• Boards backing AI-driven spend – Overall, as with other business functions in uncertain economic and geopolitical times, the outlook for technology budgets has dipped from the highs seen during and after the pandemic – but still, over a third (35%) of UK tech leaders expect their budget to rise.  Investment has become more selective. Boards are most attracted to clear business cases tied to operational efficiency and AI-powered growth.

AI increases headcount rather than replaces it:

• AI organisations recruit more technologists – The UK organisations most ahead with large-scale implementations of AI are 21% more likely to be increasing their tech headcount than their peers, mostly in areas of AI and data.
• AI’s impact on future hiring – UK tech leaders expect one in seven of their technology jobs to be fulfilled by AI in the next five years. But the Nash Squared/Harvey Nash report highlights that AI isn’t replacing people, it’s changing the kind of people leaders want to hire and the operational models they are part of.
• AI equivalent to 3 years’ tech experience – Almost two thirds (61%) of UK tech leaders would choose an AI enabled software developer with just two years’ experience, over one with a five year career but without AI skills.
• Organisations that engage with Gen Z are making more progress in AI - Compared to the UK average, organisations that attract, retain and incorporate the viewpoints of Gen Z are twice as likely to be prepared for the demands of AI and one-third more likely to report a measurable ROI from AI.

Demand up for cyber skills - but down for software engineers:

• Demand for cyber security skills jumps - After a period of decline, cyber-attacks have once again increased in the UK, and the skill demand has grown in response (up 43% since the last report).
• Major decline in software engineer shortages –  Demand for software engineering skills was the only technology skill in the UK to experience a decline (down 8%). The report says that with software development the most widely adopted use case for AI, it appears to be plugging a skills gap that has long been a challenge to recruit.

Cybercrime jumps for the first time in five years:

• Major cyber-attacks are rising again – 24% of UK tech leaders were subjected to a major attack in the last two years, the highest level since 2019 (26%) and breaking a downward trend in the last five years.
• Threat from ‘foreign powers’ and ‘insiders’ rise steeply - While organised crime remains the primary cause for concern, there has been significant growth in the threat from ‘foreign powers’ (37% in 2022 to 53%) and ‘insiders’ (27% to 42%).

DEI progress, but gender parity flatlines:

• DEI efforts remain strong despite shifting political winds - Four in ten UK organisations ramped up their DEI focus over the last two years, and very few tech leaders report DEI reducing.
• Recognising neurodiversity - Around one-fifth of a UK tech team could be considered neurodivergent, and over half of leaders (56%) have practices in place to support neurodivergent talent.
• Progress on gender is stuck - Just 24% of UK tech teams are women – the same as two years ago. Women in leadership has dropped from 12% to 10% since the last report.

AI-focused organisations have increased tech leader pay:

• Pay rises - Over half of UK tech leaders have had a salary rise in the last year, but for four in ten, pay has remained static.
• Tech leaders that have had a pay rise of 10% or more are distinct - Firstly, their CEO is significantly more focused on technology making versus saving money for the organisation (77% compared to the 63% UK average.) They are also more likely to have a large-scale implementation of AI (18% versus 15%) and more likely to be increasing tech headcount (46% versus 38%).

Andy Heyes, Managing Director, Harvey Nash, UK&I and Central Europe, concluded:

“AI is front and centre of most organisations’ 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. 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.”

‍

About the Report

In its 26th year of publication, the 2025 Nash Squared/Harvey Nash Digital Leadership Report is the world’s largest and longest-running survey of senior technology decision makers. Launched in 1998 and previously called the Harvey Nash CIO Survey, it has been an influential and respected indicator of major trends in technology and digital for over two decades. This year the survey of 2,015 technology/digital leaders globally (924 in the UK) took place between 13th December 2024 and 26th March 2025 across 62 countries. This period captures the impact of major geopolitical changes that occurred following the change of Administration in the US.

To request a full copy of the results, please visit

https://www.nashsquared.com/dlr

About Nash Squared

Nash Squared are the leading global provider of talent and technology solutions.

We’re equipped with a unique network, that realises the potential where people and technology meet. For over three decades we’ve been helping clients solve broad and complex problems, building and transforming their technology and digital capability.

www.nashsquared.com

Follow us on LinkedIn

Media Contacts:

David Pippett
ProServ PR
david@proservpr.com
+44 (0) 7899 798197

Michelle Thomas
Harvey Nash
michelle.thomas@harveynash.com
+44 (20) 7333 2677

‍

‍