IT firms face AI skills shortage, reassess cloud strategies

Whitelane Research has published the UK IT Sourcing Study 2024, revealing insights into the IT sourcing landscape in the UK. The study indicates that businesses are increasingly relying on external service providers to address AI skills shortages. Despite the ongoing experimentation with Artificial Intelligence (AI) and Generative AI (GenAI), a significant impact on business operations remains limited.

According to the study, only 5% of the top 330 IT-spending organisations in the UK report a meaningful impact from AI/GenAI thus far. Alex van den Bergh, Head of Research Europe at Whitelane Research, stated, "Organisations in the UK are increasingly spending on service providers to access necessary resources and talent, often looking offshore and nearshore due to insufficient local skills, particularly in AI, Security, and Cloud." This highlights the crucial role external service providers play in supplementing in-house capabilities amid talent shortages.

The study also reveals a growing dissatisfaction with public cloud services among UK organisations. Van den Bergh commented, "UK organisations are notably less satisfied with public cloud platforms than last year. Cost control remains a major issue with cloud, and concerns about sovereignty are rising. More organisations recognise benefits in hosting applications locally in the UK. Many larger organisations are slowing their cloud transformation and maintaining a sizeable private cloud presence." The cost and efficiency concerns are prompting businesses to reassess their cloud strategies.

Satisfaction levels with IT service providers vary significantly. Exceptional performers achieved satisfaction ratings exceeding 80%, while other providers struggle to reach 70%. This discrepancy underscores the importance for UK organisations to select IT partners based on performance metrics and capability. Van den Bergh added, "This disparity underscores the importance for UK organisations to carefully select IT partners based on performance metrics and capability."

The UK IT Sourcing Study 2024 draws on feedback from over 330 leading IT-spending organisations across both private and public sectors. It provides a comprehensive examination of current and future trends in IT sourcing and satisfaction with IT service providers and cloud platform providers. Among the findings, Hexaware was ranked highest in terms of general satisfaction in the UK.

The findings indicate a cautious approach to AI adoption due to limited local skills, and reliance on external service providers continues to be a key strategy for addressing these gaps. Organisations are balancing their cloud strategies, often retaining a private cloud presence to mitigate sovereignty and cost concerns.

Overall, the study offers valuable insights into the rapidly evolving IT landscape in the UK, shedding light on how organisations are navigating current challenges and making strategic decisions in sourcing and technology adoption.