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Fewer than half of UK tech leaders expect IT budget increase next year

Difficult economic conditions mean spending on tech will likely be conservative next year, new research suggests.

By Matthew Gooding

Most UK tech leaders do not expect to receive a boost to their IT budgets in the next year, with challenging economic conditions impacting spending plans, new research shows. The poll of IT decision-makers also highlights that while there is enthusiasm about the potential of AI, only one in ten organisations has deployed the technology on a large scale.

Most tech leaders are not expecting budget increases next year. (Photo by Gorodenkoff/Shutterstock)

The annual Nash Squared Digital Leadership report polls more than 50,000 tech leaders from around the world, and this year includes the views of 1,185 respondents from the UK. As well as concerns about spending, UK IT departments are also grappling with how best to manage hybrid teams, with small businesses managing the balance between remote and office working more effectively than their larger counterparts.

UK IT spending returns to pre-pandemic levels

According to the report, 42% of UK respondents expect their overall IT or technology budget to increase during the next 12 months, a figure that Nash Squared says is “broadly in line with pre-pandemic years”. When it comes to hiring, UK tech leaders are slightly more optimistic, with 48% predicting headcount will grow in the next year.

Globally, 45% of those surveyed foresee they will be given a larger budget in the next year. This is the lowest level since 2020.

When it comes to the types of investment being made, companies are still reluctant to back emerging tech, with the exception of pilots in AI, quantum and the metaverse, the report says. Businesses are likely to prioritise technology that increases operational efficiency.

The way tech teams are run is also changing, with more companies mandating that staff return to the office after years of hybrid or remote work. This readjustment appears to be discriminating against female staff, who are more likely to have caring responsibilities outside work than their male counterparts. For UK companies without mandated in-office days, 28% of recent tech hires are female. This number drops to 21% at UK companies with a mandated five days in the office.

Overall, a high majority (83%) of small organisations in the UK report that their in-office policy is working well compared with 64% of large organisations. Twice as many large organisations (36%) as small organisations (17%) report that their policy is working poorly.

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How tech leaders are grappling with the AI revolution

While tech vendors are keen to stress the high demand for AI systems in the market, this has yet to translate to tech teams on a large scale. Indeed, businesses are adopting the technology slowly, with only one in ten UK tech leaders surveyed saying that they have a large-scale AI implementation – a figure that has barely changed in the past five years.

However, this may be about to change, with almost half of the organisations in the UK (48%) either piloting or conducting a small-scale implementation of AI. When it comes to generative AI, this figure is currently around a third, Nash Squared’s research says.

But few companies have an AI policy in place, with just two in ten (21%) UK organisations having introduced guidance for staff, and more than a third (37%) having no plans to attempt such a policy. Despite the lack of policy on an organisational – and government – level, seven of ten UK IT bosses surveyed say the benefits of AI now outweigh the risks.

Bev White, CEO of Nash Squared, said: “Over the years there has been much hype about the potential for AI, but this year our research suggests we may have reached a tipping point.

“AI sits at the intersection of people and technology, and with the recent mass adoption of generative AI, the opportunities and challenges for organisations is potentially vast. It could be the trigger that prompts an avalanche of AI investment – similar to the mass adoption of cloud over the last ten years.”

White says that makes “the regulation and governance of AI more important than ever”. She added: “Despite their keenness, many tech leaders admit that they don’t have a clear picture of the way forward and feel unprepared for the challenges ahead.

“Establishing clear guardrails, guidelines and ethical safety nets around AI is simply essential. Otherwise, what could be one of the truly transformational enablers of the modern age could instead become one of its biggest, risk-laden destabilisers.”

Read more: Microsoft Azure the big winner as AI spurs more cloud market growth

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