**The big picture:** A new report reveals UK businesses are losing hundreds of thousands, even millions, due to tech skills gaps, particularly in cybersecurity and AI literacy, despite significant investment in AI tools. Unexpected outsourcing and project delays are common. **Why it matters:** This highlights a critical disconnect between technology investment and workforce readiness, posing a substantial financial liability and operational risk for organizations. **Between the lines:** - 57% of large businesses report skills gaps costing at least £380,000; 15% lost over £760,000. - 40% of organizations unexpectedly outsourced due to skills shortages, and 39% failed to deliver key projects. - Only 48% of organizations report most employees are AI literate, with just 6% having full AI literacy. **Staffing & HR impact:** The reliance on external talent due to skills shortages impacts recruiter mobility and gross margins, while the lack of internal development pathways necessitates strategic talent development to mitigate future risks. HR leaders must prioritize upskilling initiatives to build a resilient workforce. **The bottom line:** Without targeted investment in workforce development, the financial and operational costs of tech skills gaps will continue to escalate, hindering innovation and competitiveness.