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UK's tech sector faces double-edged challenge as AI adoption outpaces skilled immigration and upskilling efforts.
The UK tech sector is facing a talent shortage due to the increased reliance on Artificial Intelligence (AI), with 82% of AI companies expecting growth but workers being replaced or augmented by machines. The number of international workers applying for visas to work in the UK's tech sector has dropped 11% between Q2 and Q3 2025, mainly due to increased competition from other countries and rising immigration costs. Domestic talent is struggling to upskill, with AI posing significant challenges for employers on employee engagement and productivity, despite some companies seeing no impact from AI on employment or productivity. 80% of companies have seen no discernible impact from AI, but 51% cited roles augmented or replaced by AI as the main reason for cutting headcount in the past year. Skilled immigration is a significant challenge facing the UK tech sector, with many respondents calling for better incentives to encourage financial investment and greater skilled immigration. Certain countries, such as the UAE, Spain, and the US, are attracting UK tech business owners due to concerns about economic competitiveness, tax pressures, and attractiveness of other jurisdictions. Companies are seeking direct government funding for AI companies and government-backed initiatives to address skills gaps, while others recognize the need for a balanced approach to AI adoption.
The UK tech sector is facing a double-edged sword when it comes to Artificial Intelligence (AI). On one hand, AI has become an indispensable tool for growth and investment, with 82% of respondents at AI companies expecting to grow under the current UK government. However, this increased reliance on AI also means that workers in the field are being replaced or augmented by machines, leading to a significant talent shortage.
According to consultancy RSM UK, the number of international workers applying for a visa to work in the UK's tech sector has dropped 11% between Q2 and Q3 2025. This decline is attributed to a combination of factors, including increased competition from other countries and rising costs associated with immigration.
Furthermore, domestic talent is proving difficult to upskill, as evidenced by the mixed results reported by RSM's Technology Industry Outlook 2026 report. While AI is seen as a driver of growth and investment, it also poses significant challenges for employers, who are having to grapple with its impact on employee engagement and productivity.
One notable aspect of this issue is that more than 80% of companies have seen no discernible impact from AI on either employment or productivity, according to a recent study from the National Bureau of Economic Research. However, RSM's own numbers suggest that AI is having a mixed effect, with 51% of respondents citing roles augmented or replaced by AI as the main reason for cutting headcount in the past year.
The lack of skilled immigration is another significant challenge facing the UK tech sector. In fact, around 20% of respondents called for better incentives to encourage financial investment in British AI, while nearly as many said greater skilled immigration was essential. This sentiment is reflected in a separate study by investment management biz Rathbones Group, which claims that 6,000 business owners have already left the UK over the past two years, with the largest proportion coming from the tech sector.
It appears that concerns about economic competitiveness, tax pressures, and the attractiveness of other jurisdictions are driving this exodus. The United Arab Emirates was identified as the primary destination for those leaving Britain, followed by Spain and the US.
In response to these challenges, some companies are seeking direct government funding for AI companies and government-backed initiatives to address skills gaps. However, others are taking a more nuanced approach, recognizing that AI adoption must be balanced with caution.
"Tech businesses are being hit with both a decline in skilled immigration and existing talent shortages," said James Bull, senior analyst at RSM. "Workforce is likely to be one of the biggest challenges for the UK tech industry in the year ahead."
In conclusion, the double-edged sword of AI adoption in the UK tech sector highlights the need for a more strategic approach to workforce development, immigration policy, and investment in AI research and development.
UK's tech sector faces double-edged challenge as AI adoption outpaces skilled immigration and upskilling efforts.
Related Information:
https://www.ethicalhackingnews.com/articles/AI-in-the-UK-Tech-Sector-A-Double-Edged-Sword---The-Struggle-for-Skilled-Immigration-and-Upskilling-Amidst-AI-Adoption-ehn.shtml
https://go.theregister.com/feed/www.theregister.com/2026/02/24/brit_tech_firms_face_falling/
Published: Tue Feb 24 08:58:50 2026 by llama3.2 3B Q4_K_M
