The UK is facing an artificial intelligence (AI) skills gap that could leave companies struggling to compete with rivals from across the world, according to a new Microsoft report.

The research revealed that businesses in this country use less AI than firms overseas, and when they do it tends to be less advanced. UK organisations are also less likely to be classed as 'AI pros' compared to the global average (15 per cent versus 23 per cent) and the UK has a higher failure rate of AI than the global average (measured by the number of projects generating no commercial value – 29 per cent versus 19 per cent).

Analysis from IDC revealed that AI and cloud technology will play a significant role in helping businesses and societies deal with the disruption created by COVID-19, while separate research by Imperial College London highlighted that businesses must ensure they can respond to change and adapt.

Previous findings from Microsoft UK showed that organisations embracing AI outperform the competition by 11.5 per cent.

Simon Lambert, chief learning officer for Microsoft UK, said: “The most successful organisations will be the ones that transform both technically and culturally, equipping their people with the skills and knowledge to become the best competitive asset they have.

"Human ingenuity is what will make the difference – AI technology alone will not be enough.”
The report looked at the UK-specific data from a global AI skills study led by Microsoft EMEA. That survey included the views of more than 12,000 people in 20 countries - including Germany, Italy, Spain, Australia, Brazil, South Africa, the United States and Canada.

It found that 35 per cent of UK business leaders believe there will be an AI skills gap in the next two years, while 28 per cent think it is already happening - compared to the global average of 24 per cent.

The research also uncovered a lack of AI re-skilling of the UK workforce to address this skills gap. Only 17 per cent of UK employees say they have been part of re-skilling efforts - far less than the global figure of 38 per cent - while only 32 per cent of UK employees feel their workplace is doing enough to prepare them for an AI-enabled future, compared to 68 per cent who do not.

Just over half (52 per cent) of UK employees are using AI to work faster and smarter, compared to 69 per cent of employees globally.

Companies in the UK are more likely to be using AI to drive operational efficiency and free up people from basic tasks, but less likely to be deriving new product innovations or happier customers from AI projects.

The report found that 61 per cent of UK managers are focusing on the AI they implement, compared to 39 per cent who said they were focused on their people and how they work with AI.

Globally, this trend is reversed – 44 per cent prioritise the technology, compared to 56 per cent who focus on the people.

However, UK organisations are on par with their global peers when it comes to reported successful AI projects (68 per cent versus 69 per cent).

UK companies understand they need to use AI in order to remain competitive, but many are not spending enough time or money to ensure their staff can use and build AI-based solutions effectively. A lack of budget (34 per cent) was cited as the top barrier to AI re-skilling in the UK, followed by unclear return on investment (28 per cent).

Chris Withers, head of AI and advanced analytics for UK financial services at EY, said: “Many companies struggle to move AI projects from proof of concept to production - to succeed, firms must put sufficient resource and expertise into educating employees, and help them to embrace new innovations, thereby creating champions for AI-enabled change.”

Clement Jones, former chairman of the House of Lords Select Committee on Artificial Intelligence, added: “The recent pandemic is significantly accelerating the demand for digital skills - meeting this demand cannot just be a top-down process pushed by business leaders, it requires an enormous bottom-up effort from individuals at all levels who are self-motivated to improve their digital and AI-augmented skills.

“As leaders rethink their business operations, there will be much more focus on staff learning and adaption, to take an ongoing agile approach to this new world of work.”

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