AI has created the ‘world’s biggest and fastest’ tech skills shortage in over a decade, according to the latest results of a report that has been tracking the views of technology leaders since the late 1990s.

The Nash Squared/Harvey Nash Digital Leadership Report, the longest-running survey of tech leadership in the world, has found that AI jumped from being the sixth most scarce technology skill to number one in just 18 months – the steepest rise in any technology skills shortage recorded in fifteen years.

Almost twice as many technology leaders (51%) compared to the previous report (28%) now say they are suffering an AI skills shortage, an 82% jump. In comparison, the next biggest reported shortage was in big data skills, which saw an increase of just 38%.

Even cyber skills, where demand has steadily grown over time, haven’t experienced the same sharp rise, with skill shortages rising more gradually from 16% in 2009 to 33% this year.

The AI talent gap has become so pronounced that nearly two-thirds (65%) of tech leaders now say they would rather choose an AI-enabled software developer with just two years of experience over one with five years in the industry but no AI skills.

That shift may be promising for those just starting their careers, and potentially for the businesses hiring them. According to Nash Squared, companies that successfully attract, retain, and listen to Gen Z talent are twice as likely to feel prepared for the demands of AI, and 20% more likely to report measurable returns on their AI investments.

The preference for ready-made AI skills may also reflect the uncertainty many leaders still face in how to tackle the shortage, with the report finding more than half of organisations (52%) are still not upskilling staff in genAI.

“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,” said 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.”

The figures back up the idea that a lack of human capital is limiting businesses’ future AI plans. According to the report, those organisations most ahead with large-scale implementations of AI are 24% more likely to be increasing their tech headcount than their peers, mostly in areas of AI and data.

Regardless, the AI skills shortage has not stopped the vast majority of firms, prepared or not, from dramatically increasing investment in emerging tech. 

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A striking 90% of tech leaders said that they are piloting AI or investing in small to large-scale deployments, up from just 59% in the previous Nash Squared Digital Leadership Report, although investment has become more selective, with Boards most attracted to clear business cases tied to operational efficiency and AI-powered growth.

Despite this steep rise in adoption, more than two-thirds (67%) of tech leaders say they have yet to see measurable ROI from their AI pilots, however larger organisations seem to be having more success. Over half (53%) of companies with technology budgets exceeding $500 million (£373.4m) are already reporting a measurable return on their AI investments.