The Growing Skills Gap in UK Employment: A Call for Internal Mobility and Strategic Development

Guest PostsAnalyticsArtificial Intelligence

By Rich Wilson On Mar 20, 2025

The UK’s workforce is at a crucial juncture, caught in the grip of an emerging and growing imbalance between the in-demand skills of the future and the country’s ability to cultivate those skills.Right now, AI and machine learning are the technical skills most sought after by businesses, yet the reality is that these are the areas where organisations are facing some of their most significant shortages.

The UK Government’s recent AI Opportunities Action Plan was designed with the ambition of making the country an AI superpower. Yet, despite the plan’s far-reaching efforts, it remains abundantly clear that the UK is struggling to develop a sufficient talent pool to meet the growing demand for these skills.

This situation represents a monumental recruitment challenge—the likes of which we haven’t seen since the industrial revolution. Businesses must step up and lead the way in developing the capabilities of their employees, particularly through investing in internal mobility and employee development. The message is clear: by preparing for the seismic workforce shift AI will bring, organisations can maximise the potential of both their people and the AI technology they choose to integrate into their operations.

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The Traditional Hiring Model Isn’t Working

The UK’s technology industry has long been dominated by boom-and-bust hiring cycles. Traditional recruitment methods are simply not capable of sourcing and retaining enough talent to close the skills gap, which the Government estimates is costing the UK economy £63 billion per year.

One crucial insight is that businesses may already have some of the talent they need, sitting within their own organisations, often overlooked. Moreover, organisations must also tap into a diverse and thriving ecosystem of contingent talent, including specialist freelancers and contractors. This blended workforce strategy can go a long way toward bridging the gap in AI and machine learning skills, enabling UK businesses to respond to demand more effectively.

A Shift Towards Skills-Based Hiring

Data increasingly shows that senior tech leaders recognise the need for a shift away from traditional recruitment practices and are increasingly focusing on building skills-powered organisations.This evolution is largely fuelled by the rise of skills-based hiring, a recruitment strategy that goes beyond degrees and traditional qualifications to prioritise actual skills and capabilities.

Skills-based hiring moves away from the old paradigm, where a candidate’s education and credentials were the most important factors, to one in which practical skills are the key currency. However, while this shift is gaining traction, many organisations are struggling to implement skills-based hiring effectively.

A report launched by Gigged.AI found that, despite most companies claiming to have adopted skills-based hiring, only 37% had fully integrated it into their overall people strategy. This reveals a significant gap between intent and execution. Moreover, the majority of organisations are taking a fragmented, siloed approach to skills-based hiring. This approach, typically limited to hiring managers, is insufficient for creating a truly skills-powered organisation.

Tracking Skills to Close the Gap

One of the most effective ways businesses can narrow the skills gap internally is through skills tracking. According to recent data, 87% of senior tech leaders reported an increase in employee upskilling as a result of tracking workforce skills. This proactive approach doesn’t just reveal existing skill gaps; it also enables businesses to better understand where their employees can be developed and where new talent may be needed.

A significant percentage of respondents (38%) said they discovered previously overlooked AI and machine learning skills among their current employees. This represents a goldmine of untapped potential that, if nurtured, could go a long way toward bridging the AI skills gap.

Despite the clear benefits of skills tracking, adoption remains relatively slow. Only 33% of businesses have a dedicated software solution for tracking employee skills, even though those that have implemented such tools report significant improvements in employee performance and satisfaction. This lack of software adoption, coupled with reliance on outdated methods like performance reviews or manual tracking, means that many companies are missing opportunities to maximise their existing talent pool.

Internal Mobility: Unlocking Untapped Potential

For businesses to truly address the skills gap, they must embrace internal mobility. This allows companies to source talent from within, ensuring that employees have opportunities to grow, transition to new roles, and upskill for emerging challenges.

Internal job boards and career development programs are two of the most effective strategies being used today. According to recent data, one-third of open positions in businesses were filled through internal hires. Larger organisations are particularly adept at leveraging internal mobility, with 52% regularly using employee skills to fill skill gaps.

By maximising internal talent, businesses become more agile and are better equipped to manage the fast-paced changes brought on by AI and other technological advancements. External talent sourcing, while important, should not overshadow the value of developing and nurturing the skills that already exist within the organisation.

The Path Forward

The growing AI skills gap presents a profound challenge, but it also offers an opportunity for businesses to take bold action. By embracing skills-based hiring, tracking employee skills, and fostering internal mobility, UK organisations can begin to build a future-proof workforce that is both equipped to handle AI-driven changes and able to grow alongside them. The task ahead is not insurmountable, but it requires businesses to rethink their approach to talent. It’s not just about hiring the best candidates—it’s about building the workforce of tomorrow, today.

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