The changing face of the workforce: Is skills transformation the next digital transformation?

In 2025, the role of digital transformation continues to evolve within businesses, but there’s an underlying issue – a growing digital skills gap, creating a mismatch between the digital competencies businesses require to remain competitive, and the skills their workforce possesses. 

AI has also become a key part of the digital transformation toolbox within UK businesses. This year, AI adoption is expected to climb to 22.7%, translating to an additional 267,000 businesses leveraging the technology’s solutions.

However, research shows that 88% of business leaders in the UK said their staff lacked in at least one area of digital skills. This leads to challenges in innovation and growth. 

As well as being a crucial business tactic designed to streamline business operations, digital transformation allows businesses to stay relevant and maintain a competitive edge whilst adapting to a fast-changing market. 

Without the necessary skills however, it will become increasingly difficult for businesses to adapt. 

Where are the current digital skills gaps? 

Digital transformation, and the increase in usage of technologies such as AI and machine learning, has marked a fundamental shift in the way that organisations ready themselves for new market demands.

To meet these new demands, it’s key that workforces are equipped with the right skills. 

For example, although AI adoption is expected to increase by 22.7% this year, a recent survey highlighted that 33% of UK business leaders currently lack confidence in their organisation’s level of AI proficiency, compared to countries such as India (49%) and France (55%).  

Furthermore, it’s been reported that current skills gaps are forcing 43% of UK business leaders to consider hiring internationally, rather than focusing on upskilling or reskilling within their existing workforce. 

How can skills gaps be addressed? 

To fill these skills gaps, and reduce the need to look overseas for new hires, leaders are turning to skills transformation. 

Undergoing a skills transformation involves identifying opportunities for reskilling and upskilling within the workforce and generally placing a greater focus on capabilities for greater success, rather than just looking at traditional qualifications. 

As part of the ongoing skills transformation, businesses are moving away from traditional job-based planning to a more fluid, skills-focused approach, with some organisations going beyond and becoming “skills-based organisations” (SBO). 

SBOs emphasise skills over traditional roles; aligning workforce planning, attraction, recruitment, professional development, performance management and talent and succession planning processes around skills needs.    

According to one recent report, 81% of employers used skills-based hiring in 2024 (up from 56% in 2023). But how can employers ensure that a skills transformation works to their advantage, and what does it look like in practice? 

Skills mapping: creating a strong foundation for skills transformation 

Working towards a skills transformation doesn't mean implementing hugely complex organisational structures. Instead, it’s about having a clear understanding of the competencies needed to achieve business growth, and how to acquire, develop and deploy those skills effectively. 

For example, it’s been predicted that more than three quarters of jobs will require some element of digital skills by 2030. With this in mind, it’s vital for business leaders to take time to identify any skills gaps in the current workforce and take stock of the skills they already have. 

Also known as ‘skills mapping’, this process will allow for purposeful team building going forward.  A skills-based approach to team building means that businesses are more likely to create diverse teams with more to offer through different perspectives. 

As businesses evolve over time, it’s also key for business leaders to recognise that skills needs are fluid. They shift and grow alongside the business, so creating clear paths for expanding capabilities is essential.

Implementing a skills strategy which makes a difference 

Making more room for skills means having a robust skills strategy aligned with overarching business strategy, which is tailored to a given organisation and its specific needs.

After mapping out the skills which currently exist within an organisation, employers must then look to prioritise hiring, partnering or training based on critical skills gaps. 

From there, it’s essential to create a greater level of visibility for skills, by ensuring that employees understand the full range of skills required for a given role, and the opportunities there are for upskilling or reskilling where necessary. 

For the digital industry, skills gaps are most prevalent in workers aged 50 and over, with 42% of employers open to hiring people in this age range, compared to 74% being happy to hire those aged 18 to 34. 

It’s important these factors are considered within a wider skills strategy, as workers aged 50 and above could easily benefit from reskilling through the right training programme, vs externally hiring younger workers.

Another key point to take into consideration is that skills needs are fluid, and ever-changing. Scheduling an ongoing assessment of skills needs based on business progress will help to proactively identify emerging skills gaps, and how to fill them, before they become an issue for the wider business. 

The crucial role of apprenticeships

Training programmes such as apprenticeships form a crucial part of any skills transformation, but some business owners question whether introducing apprenticeship programmes is the right approach for their organisation. When successfully integrated into day-to-day business operations, however, apprenticeships could lead to several opportunities for economic growth.  

We already know that AI usage on the rise, and businesses encouraging AI training and upskilling through apprenticeships can experience long-term cost savings, improved competitiveness, operational efficiency, more accurate decision-making, and higher employee satisfaction and retention.

To maximise impact, apprenticeships must be adequately funded and widely promoted within a business. Clear progression pathways, for example from basic digital literacy to advanced AI roles, will be essential to ensuring that the workforce is equipped with the skills it needs in the long-term. 

Final thoughts 

Much like the ongoing digital transformation, skills transformation has the potential to change the face of UK businesses for the better.

Skills transformation by no means must result in a drastic overhaul of the way businesses operate. Rather, understanding skills and placing more emphasis on them instead of traditional credentials, allows for a more fluid, flexible and competitive approach to business. 

When implemented successfully, a greater focus on skills will allow business leaders to future-proof their workforce, as they work towards boosting economic growth in years to come.