Technology skills development company Pluralsight has launched its annual Tech Skills Report, revealing a growing gap between organisations’ investment in technology and their ability to build and verify the workforce skills needed to make the most of it – with significant financial consequences.

The survey of 500 UK tech executives, IT professionals and L&D leaders, found that skills shortages are no longer solely a workforce challenge, but a significant financial liability. For businesses generating £73 million or more in revenue, 57% say skills gaps have cost them at least £380,000, and 15% report costs of £760,000 or more. The impact is particularly acute amongst cybersecurity professionals, where 41% estimate skills gaps to have cost their organisations at least £380,000 over the past year, compared with 35% of respondents overall.

Matthew Lloyd Davies, Principal Security Author at Pluralsight said: “Cybersecurity skills gaps are particularly costly because they lengthen the window attackers stay undetected, and cost scales with that window. The longer the window is open, the greater the financial impact as costs quickly spread from business interruption to recruiting external specialists. Building cybersecurity expertise across the workforce is therefore imperative to managing business risk. Those that ignore early warning signs of backlogs, staff burnout and rising remediation costs will suffer greater financial pain.”

For many, this has resulted in an unexpected reliance on external talent, as well as project delays and budget issues. 40% of organisations have unexpectedly had to outsource or hire for key project work because of skills shortages, and 39% have failed to deliver key projects. Almost a third (30%) have experienced budget overruns and more than a quarter (27%) have lost a client or contract.

That challenge is particularly apparent in AI. Although 94% of organisations have invested in AI tools for at least some of their employees, most still lack the readiness needed to use that technology effectively.

Demand for entry-level talent remains, but the pipeline is falling short

Despite concerns that AI could erode entry-level roles, UK organisations are continuing to recruit junior technology professionals. In fact, 85% of UK organisations have hired the same number or more junior tech professionals this year, although 10% have significantly increased hiring.

Evidently, today’s recruitment is not resolving concerns about tomorrow’s workforce. Almost nine in ten (88%) worry they don’t have enough junior talent coming through to address future skills gaps that AI can’t solve.

Faye Ellis, Author Fellow at Pluralsight said “With a significant amount of youth in the UK not in education, employment or training (otherwise known as NEET), organizations may see gaps in their entry-level tech talent pool. This means that businesses cannot rely on recruitment alone, but must invest in clear development pathways that prepare new talent and help existing employees continually build relevant skills.”

AI investment is accelerating faster than workforce readiness

The talent problem extends beyond junior hires: less than half (48%) of organisations say most, or all of their employees are AI literate, and only 6% report AI literacy across their entire workforce.

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Organisations know they need to build AI literacy in the workforce, but the capabilities they need continue to evolve. More than half (57%) say demand for AI, machine learning and data science skills has increased due to the adoption of AI technology, and 26% say new tech skills can become obsolete within a year.

Leaders recognise the problem, but remain unsure how to solve it

Although the consequences of skills shortages are becoming clearer, many organisations are struggling to turn that awareness into action. Over half of (53%) of senior leaders are unsure how to solve their skills gaps, while employees and learning teams face practical barriers to progress.

Almost half (46%) of technology workers say they struggle to find time for training, and 28% of L&D leaders cite a lack of support from leadership as a barrier to upskilling. Together, the findings reveal a cycle in which leaders recognise the need for new capabilities, but employees lack the time and organisational support to develop them.