One of the biggest asks from businesses we're supporting right now is help with their 'AI Strategy.' But what is inevitably starting as a platform and process question quickly turns into one about people and talent. And this is the point so many seem to be missing.
AI can be genuinely transformative. The productivity gains are real, the growth potential enormous, and businesses are right to lean in. But in the race to optimise in the short term, there is a real risk that many are setting themselves up for a painful reckoning down the line.
Companies are neglecting to invest in upskilling their current workforce in how to best leverage AI today - leaving opportunity on the table, increasing risk and ultimately allowing competitors to overtake them. But more worrying in the long term is the lack of thought (let alone investment) going into future talent strategy as part of their wider business strategy and transformation efforts.
62% of UK employers expect junior and administrative roles to be lost to AI, according to the CIPD. Meanwhile, UK tech sector graduate hiring has already fallen 46% in the past year, with a further 53% drop projected, according to the Institute of Student Employers. Even the Bank of England has flagged the concern with Governor Andrew Bailey warning that AI could damage the very talent pipeline that helps workers progress into senior roles.
Manchester has been named the UK's fastest growing city economy, forecast to record the joint-fastest rate of employment growth of all UK towns and cities through to 2028. Yet even here, the Manchester Digital DSF26 Sector Insights Report (the most comprehensive skills audit of the region's tech sector) shows that skills shortages are already a huge constraint on AI adoption and overall growth, with 16% of businesses not recruiting early talent at all. If the city leading the UK's growth charge has a pipeline problem, the rest of the country should be paying close attention.
The offshoring wave of the 2000s is instructive. The businesses that made it work weren't just chasing cost reduction, they thought holistically about the whole operating model. They were deliberate about which knowledge stayed close, how offshore and onshore teams connected, and what capabilities needed to be nurtured on both sides. Those who treated it purely as an arbitrage play, without that strategic coherence, often found themselves with hollowed-out teams, lost institutional knowledge and an expensive rebuild further down the line. The risk with AI-driven talent decisions today is strikingly similar.
The smartest organisations are already reading this very differently. IBM is tripling its entry-level hiring this year, with its Chief HR Officer making the case that "the companies three to five years from now that are going to be the most successful are those companies that doubled down on entry-level hiring in this environment." Rather than cutting the base, IBM is rewriting entry-level jobs entirely by moving people away from tasks AI can now handle and into higher-value work with clients, strategy and new product development. Cognizant, meanwhile, has already been redesigning its talent model around a pyramid that's "broader and shorter" - actively recruiting liberal arts graduates alongside engineers. That's not sentiment. That's competitive strategy – strategy that is purposeful, long term (with investment), deliverable and geared around growth.
Looking across the pond, AWS CEO Matt Garman was characteristically blunt. He called replacing junior staff with AI "the dumbest thing I've ever heard," pointing out they are "probably the least expensive employees you have" and "the most leaned into your AI tools." "At some point that whole thing explodes on itself," he warned.
The critical insight is that this isn't Tech OR Talent — they cannot be looked at in isolation. You need to think about the whole system. That means equipping your people with the skills and behaviours to work effectively with AI right now. But it also means taking the longer view: how do you build succession depth, develop future leaders, and create pathways for the next generation to genuinely learn the business? Those require new paradigms — not just updated versions of old ones.
For AI to drive lasting, sustainable growth, your talent strategy must evolve alongside your technology strategy as part of thoughtful and long term integrated business strategy and transformation plan.
Want to explore what an integrated AI-enabled strategy looks like for your business? Let's talk - Intelio Works can help!
