Turbulence in the AI Talent Marketplace
Act now or struggle later
There is little doubt that AI represents the transformative force of our time. This is why 9 in 10 businesses are accelerating spend with a majority declaring it their #1 priority. Collectively, they believe AI will fuel meaningful innovation and drive gains in productivity well beyond the current overall rate of 3% reported by the US Bureau of Labor Statistics.
However, the most critical imperative of all is sitting somewhere up in the “stratosphere” within most organizations, lacking the critical attention it needs. It’s the imperative to win the battle for the best people.
Simply put - organizations don’t do things, people do. It has never been truer than with AI. The most effective AI teams are those composed of multi-disciplinary skills that instill the ability to harness the “wisdom of crowds” to collaborate, innovate and operate in unison.
This is why, in part, we are seeing the emergence of a totally new c-suite role, the chief AI officer (CAIO). Their mission is to weave together a holistic AI strategies, redesign organizational models, build talent pools and inspire interdisciplinary work cultures. Its a critical role, as AI is a “team-sport” involving over a dozen specialized roles that must think and operate in unison:
This is especially true as AI rapidly evolves into advanced domains, such as Causal AI where teams of subject matter experts, business leaders and technologists must fuse their skill sets to deliver new business models.
Yet, today, a large majority of businesses report a growing gap between AI investments and workforce readiness. Few say they understand their current or future AI skill profiles or even how to define those needs. Furthermore, most are struggling to find AI talent and are facing an alarmingly high rate of employees that are considering leaving to find new AI-savvy jobs.
The supply and demand dynamics in the AI talent marketplace is a story of two colliding forces that will create TAILWINDS for some and HEADWINDS for the rest. Consider an analogy, the polar jet - a condition that occurs in the jet stream when unusually warm and cold air masses collide in the stratosphere to produce intensifying winds. When flying into the headwinds the journey will be 4x more turbulent, 20-30% slower and 50-60% more costly. For those in the tailwinds, they’ll experience the opposite.
Within the AI talent marketplace, accelerating DEMAND is now colliding with limited SUPPLY to create a defining moment. Those that act quickly to secure the best talent will ride tailwinds to success while the rest will face the headwinds of dwindling skill availability and growing acquisition costs. At stake is a smoother journey to AI, lower costs, and faster time-to-value.
Where are we today?
Overall, AI is the #1 job creation category as a fraction of overall employment holding a 2.3% penetration rate, up from 0.5% in 2015 – a 5x expansion! This will only accelerate as businesses’ rank AI as top re-skilling priority, jumping 12 positions from last year. Employers are also willing to pay an average of 47% more for the best AI skills. Demand is accelerating.
In addition, the flow of new entrants into the AI labor force is not nearly keeping pace with demand. According to StudyPortal, demand for an AI education is 4.4x capacity at US universities and 2.6x for data science programs. And a Randstad’s Work Monitor Pulse reported a staggering 2,000% surge in roles demanding at least some AI skills, yet only 10% are being trained. Supply will not keep up.
Clearly, the conditions have been set for a highly turbulent AI talent marketplace. To bring it all home, let’s explore the supply and demand dynamics within 3 key skill categories:
AI Engineers
AI Researchers
AI Executives
Which will highlight the need to act with urgency before it’s too late.
AI Engineers
For those that design and build AI models and apps …
SUPPLY & DEMAND: Demand has grown 75% YTY while supply has only grown 40% - a whopping 2x gap. In addition, the US Bureau of Labor Statistics projects demand to expand 82% over the next few years.
TODAY’S ACCELERANT: Generative AI is today’s accelerant. Upworks reported a 450% increase in job postings and a Lightcase study indicated a similar growth rate driven by 385,000 new GenAI US job posting YoY.
TOMORROW’S ACCELERANT: Causal AI will drive more advanced skills as businesses look to infuse “cause and effect” into their AI models. According to LinkedIn, there were 623 new job postings added just over the last 30 days looking for this skill set, more than 2x the previous month.
SHOW ME THE MONEY: Demand will drive a 20% compounded growth in salaries over the next three years. This is larger than all other occupations combined and represents a historic level of growth within the typical technology adoption curve.
AI Researchers (PhDs)
For those that architect advanced AI models …
TOP SKILL: AI researchers are the #1 job category being sought by employers among 11 individual technologist roles tracked a Foundry AI Priorities Study in 2023. Nearly 33% of employers are seeking this skill set as specialized models grow in popularity. Overall, a historic 15% of all AI jobs are in research, as compared to cloud at 2%. As the NBER points out - “AI is the only technology at the top in both number and percentage of research job postings”.
SUPPLY & DEMAND: AI researchers taking jobs in private industry has grown from 3.5x over the last decade to 70%. Overall demand will expand by 23% - 2x all computer occupations. Yet, but growth in supply will stagnate at 4% over the years ahead.
SHOW ME THE MONEY: This limited skill set is experiencing explosive growth in salaries and may accelerate from there as only about 20% of graduating computer science PhDs have specialized in AI. In private industry, this is resulting in salaries nearly doubling to over $180K.
AI Executives
For those responsible for realizing business impact from AI investments …
HIGH DEMAND: The chief AI Officer (CAIO) is one is one of the hottest new roles being created by CEOs. According to research by Foundry, 11% of businesses have a CAIO in place, which will triple in to 32% in 2024. The number of businesses that have hired VP-level AI strategy leaders will also surge to about 80% in the years ahead, growing from only about a 25% of companies that have such a position today.
LIMITED SUPPLY: Nearly 8 in 10 of current executive business leaders are concerned about their own lack of AI skills with 56% believing AI is becoming a required skill set in the near future. Over half fear they will be replaced, as they fear they cannot compete for AI executive roles.
SHOW ME THE MONEY: The surge in demand for AI execs has resulted in compensation packages averaging over $1.1M in 2023 due to the limited supply of execs that have the required business + AI + tech skills.
Summary
As the supply and demand dynamics of these three key AI positions indicate, businesses need to create a massive sense of urgency to secure the AI talent they need, now rather than later, before it’s too late.
The “Polar Jet” effect is intensifying. Get into the tailwinds, else risk an uncertain future. And if I can help you create an AI talent and organizational design strategy, please just reach out or visit my AI talent ecosystem website.
