UAE businesses accelerate AI adoption but face mounting infrastructure and skills challenges, Kyndryl report finds

Raoul Van Engelshoven, managing director, Kyndryl UAE/Image: Supplied

Kyndryl, the global provider of mission-critical IT services, has released the UAE edition of its second annual Readiness Report, revealing a landscape where organisations are rapidly advancing their AI agendas while grappling with intensifying pressure to modernise core systems, strengthen cybersecurity, and address widening workforce skills gaps.

“The UAE has set out one of the most ambitious AI agendas in the world, from its drive to build an AI-powered government to the transformation of key industries and the development of an AI-ready workforce,” said Raoul Van Engelshoven, managing director, Kyndryl UAE. “The findings of the Kyndryl Readiness Report reflect this momentum, showing how organizations across the UAE are accelerating their adoption of AI to match the nation’s vision.”

The report highlights both progress and persistent structural challenges across UAE enterprises:

AI returns growing — but scaling remains difficult
Seventy percent of UAE organisations report increased pressure to demonstrate ROI on AI investments compared to last year. Yet AI adoption remains largely experimental, with 66% stating their innovation efforts stall after proof-of-concept, and 67 per cent citing foundational issues in their technology stack as a major barrier.

Confidence surpasses capability
Although businesses remain optimistic about their readiness, leaders acknowledge systemic obstacles.
• 91 per cent say they struggle to keep up with the pace of technological advancement.
• 26 per cent cite complex technology environments as a barrier to scaling investments.
• 24 per cent say misalignment between business and technology teams hinders progress.

AI reshaping workforces amid significant skills gaps
The majority — 93 per cent — believe AI will “completely” transform jobs within their organisations over the next 12 months. However, concerns are rising over workforce readiness:
• 30 per cent are unsure how to upskill or reskill staff displaced by AI.
• 41 per cent cite gaps in core cognitive skills.
• 40 per cent report shortages in technical skills needed to fully leverage AI.

Cyber resilience a growing priority
With 86 per cent of organisations in the UAE experiencing a cyber-related outage in the past year, cybersecurity remains urgent. Despite this, only 38 per cent have implemented robust cybersecurity measures, and just 35 per cent are upgrading IT infrastructure to mitigate operational risks.

Regulation shaping infrastructure decisions
As organisations scale digital investments, 27 per cent cite regulatory or compliance requirements as barriers — highlighting the increasing influence of policy frameworks on cloud and data strategies.

Geopolitics reshaping cloud strategies
The report shows a significant shift in how UAE businesses approach cloud infrastructure:
• 86 per cent of leaders are concerned about geopolitical risks associated with storing data in global cloud environments.
• 68 per cent have already adjusted strategies, including data repatriation, vendor reassessment, and a shift toward private cloud models.

Kyndryl says these findings point to an inflection point for UAE organisations — one where accelerating AI ambitions must be matched by modernised infrastructure, upgraded cybersecurity, and coordinated workforce development to achieve sustainable transformation.

To read the full findings, visit Kyndryl’s Readiness Report.