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The demand for AI skills is outpacing supply at an extraordinary rate. According to the latest Nash Squared/Harvey Nash Digital Leadership Report, 51% of global tech leaders now say their organisation has an AI skills shortage, almost double the 28% reported just a year ago. AI has leapt from sixth to the number one most-scarce skill in just 18 months, marking the steepest rise seen in over 15 years of research. Featured in a recent ZDNet article, Nash Squared CIO Ankur Anand , offers timely insight into why the gap has grown so significantly, and what organisations can do to address it. He points to the speed of innovation as a key factor: “There’s an unprecedented pace of development in generative AI and the supporting large language models… Professionals must learn new skills quickly, and traditional learning methods can’t keep pace.” The article explores how forward-thinking leaders are adapting, from rethinking recruitment to embedding continuous learning, and ensuring their organisations can attract and retain the right blend of AI expertise and ethical awareness. You can read the full ZDNet article, including Ankur Anand’s insights and reflections on the fast-moving AI skills landscape, here.

Skills shortages continue to stalk the technology industry. Although not as acute as in the post-pandemic period, large proportions of technology leaders admit that skills shortages are holding them back. In this year’s Nash Squared/Harvey Nash Digital Leadership Report (DLR), AI tops the list with 51% of leaders reporting a skills shortage, but other areas rank highly too, notably big data/data engineering (36%), cyber security (33%), and cloud and platform engineers (26%).   It isn’t just that these skills are hard to find – some technology leaders may not have the headcount room to recruit additional staff. Although a healthy 41% of technology leaders expect to see headcount growth in their teams this year, this is down from 50% in 2023. Budgets follow a similar pattern – with a slight fall in leaders expecting a technology budget increase, from 45% in 2023 to 39% now. While many digital leaders are still anticipating headcount and budget growth, the numbers have subsided somewhat in a tighter economic environment.    The DLR shows us that for many technology leaders, at least part of the solution to this conundrum is outsourcing – using external solution providers for specific projects and activities. Over four in ten technology leaders expect their use of outsourcing to increase in the coming year, compared to 34% who say directly employed headcount will rise, and 29% who expect indirectly employed headcount (contractors, temporary staff) to increase. Only 15% of leaders expect outsourcing to decrease, a much lower proportion than those who say that of direct employment (25%) and indirect (20%). Tech leaders’ sentiment towards increasing outsourcing in the coming year has been backed up by Statista, that forecasts the IT outsourcing market  will  be worth £44bn in 2025, with a projected annual growth rate of over 9% from 2025-2029.    Outsourcing attractions Given the cost of outsourcing as a solution, it may seem almost counter-intuitive that it tops the list at a time of economic caution. However, I believe there are a number of compelling factors that are putting it higher on tech leaders’ agendas.   Firstly, outsourcing is very flexible. In times of uncertainty, having a resourcing model that can quickly ramp up and down as needed is appealing.    Secondly, it’s easy. Most organisations, certainly large ones, will have agreements already in place with a number of consultancies and solutions providers that can be activated or extended when needed. It’s a quick and straightforward fix to a resourcing or workload issue. It’s a reflection too of how the barrier between what lies inside an organisation and what lies outside has lowered. Technology itself, like cloud and the productisation of software and business activities that previously were home-grown, has made it easier for some things, especially operational activities, to be done externally. The explosion in remote working has lowered the barrier even further.   It is also a route to quality. With the right provider, backed up by precise SLAs and rigorous performance metrics, a buyer should be assuring themselves of a good outcome that achieves the goals and objectives set. It’s rather like the old saying that “no one got fired for buying IBM”. If you’re using a leading consultancy/solutions provider, you should be on safe ground. With ever more solutions specialists and niche providers in the market, it’s also possible to find support for practically any need – whether that’s a managed service, application transformation, cyber, data and AI, or cloud. There are often a number of wider benefits too. Beyond the immediate work they’re doing, a good consultancy will offer wider guidance, best practice insights and thought leadership on emerging areas such as AI.   But perhaps equal to all of these factors in the current climate is that outsourcing doesn’t add to headcount – it’s just spend. As long as there is room in the existing budget, there is no need – or only a limited one – for difficult discussions with HR or other leadership. At a time when the cost of employment is rising through NI increases, and when IR35 changes are also making the use of contractors more complicated, contracting with an outsourced service provider becomes more attractive.    Balancing resourcing models This is something we’re seeing ourselves at Harvey Nash, where increasingly more clients are asking us to put together a team of people under a services agreement, rather than to recruit individuals in different roles. It’s a variation on going to a services provider and is becoming a more common ask across the recruitment industry.   That’s not to say other models won’t continue to be key. Indirect employment of contractors and freelancers remains another flexible tool that always grows when market conditions are tight. Meanwhile, organisations continue to hunt for the right talent to bring in internally. Tech leaders still place primacy on their own teams. Candidates with the requisite skills and experience remain in demand.    More than anything, our findings underline that managing technology in a continually evolving environment is complex. That’s why technology leaders need to juggle multiple resourcing models and continually assess the balance as they strive to help their businesses modernise, transform and grow.

Harvey Nash’s Helen Fleming, Executive Director, and Peter Birch, Director of Technology and Digital Executive Search recently featured in a Computing article exploring why some technology leaders are receiving inflation-busting salary increases, and what sets them apart. Drawing on the latest insights from the 2025 Harvey Nash Digital Leadership Report, the article reveals that over half of technology leaders globally received a pay rise last year, with 11% securing an uplift of over 10%. The data points to a clear pattern, the most rewarded leaders are working in businesses where technology is seen as a growth engine, not just a cost centre. These organisations are more likely to be investing in AI at scale, expanding their tech teams, and backed by leaders who view technology as a strategic enabler. Helen and Peter share advice for tech leaders looking to improve their earning potential - from aligning with forward-thinking, tech-driven organisations to choosing sectors with stronger demand and budgets for senior digital talent, such as financial services, healthcare, and defense. To find out how the most successful leaders are shaping their careers – and their compensation – read the full article in Computing.

On 16th May, Andy Heyes, Managing Director UK&I & Central Europe, joined industry leaders and policymakers at parliament for the official launch of the UK’s National Hiring Taskforce, a new initiative from the Better Hiring Institute. The event brought together voices from across government, business, and recruitment to discuss how the UK can modernise and improve its hiring landscape. With a central theme of ‘reimagining recruitment’, the Taskforce aims to explore how we can make hiring faster, fairer, and more inclusive through technology, data, and innovation. Andy represented Harvey Nash in discussions focused on the evolving role of technology in recruitment, particularly how innovation can reduce friction in the hiring process and unlock untapped talent across all regions and sectors. A key theme was the need to move beyond traditional job titles and qualifications, instead focusing on individuals’ potential and transferable skills to build more diverse, agile and skills-driven workforces. By bringing together key decision-makers and forward-thinking organisations, the launch highlighted a shared commitment to making recruitment work better for everyone in the UK. As a leader in technology recruitment, Harvey Nash is proud to contribute to these important conversations. We see daily how innovation can connect people to meaningful opportunities and help organisations build diverse, high-performing tech teams. Being part of the National Hiring Taskforce reflects our continued dedication to shaping a recruitment industry that is modern, inclusive, and future-ready.