According to recent research by Ayming, an innovation consultancy, the largest barrier to innovation within IT industries is a shortage of skilled talent. In a survey of IT and technology business leaders, 41% identified this skills gap as the primary hurdle. A further 35% cited unstable research and development (R&D) budgets as a significant challenge.
In response, a quarter of IT firms are prioritising talent attraction and retention as part of their strategic planning towards the end of 2026. Addressing these skills shortages is viewed as essential to sustaining innovation activity.
The survey also identified a growing trend towards offshore R&D. Among the 56% of IT businesses that outsource R&D, 40% stated that improved access to the necessary talent was a key reason. In addition, 26% indicated that lower wage costs for R&D talent were an important factor.
Mark Smith, Managing Director at Ayming UK, commented: “When we talk about innovation, the focus often falls on shiny new technologies, but the reality is that innovation is driven by people. It’s people who develop new technologies, apply them in the real world, and carry out the R&D that turns ideas into commercial success."
Smith added: “The IT sector is already innovating as pace, but sustaining that momentum depends on access to the right specialist skills. Without a sustainable pipeline of talent, there is real risk that skills shortages will push more R&D and development activity overseas, leaving firms with the outcomes of innovation, rather than the infrastructure needed to build and deliver it in the long term.”
Key findings include:
- Challenges: Talent shortages are identified as the top barrier to technological innovation, with unstable R&D budgets following closely behind.
- Investment: Despite ongoing economic pressures, 90% of technology firms intend to increase or significantly increase their innovation budgets in 2026.
- Funding sources: Self-funding remains the most common approach to financing innovation projects, followed by equity funding (46%) and innovation grants (44%).
- Strategic outlook: More than half of IT and technology companies now have innovation strategies that extend over the next decade, exceeding levels seen in other sectors.
