UK SMEs lag behind larger firms in adopting artificial intelligence

New research from Employment Hero has found that small and medium-sized enterprises in the UK are adopting artificial intelligence tools at a much slower rate than larger organisations.

The "Work That Works" report, based on responses from 1,000 business leaders and 1,200 employees across the UK, indicates that 54% of the SMEs surveyed use AI tools less than once a month, while 38% report never having used them at all. This limited uptake comes despite the growing presence of automation and digital technologies in the broader economy.

The study suggests that this trend could negatively impact the productivity, innovation and competitiveness of UK SMEs over the longer term. Respondents who do engage with AI in their roles described a range of benefits, with two-thirds (66%) stating that AI improves the quality of their work, and 62% feeling both more creative and less overwhelmed as a result. Additionally, 57% said they procrastinate less due to AI, and 51% reported working fewer hours, pointing to improvements in both productivity and employee well-being.

Despite these reported advantages, only 24% of respondents believe their organisations are making meaningful investments in AI tools or in training staff to use these technologies. This points to a gap between the potential impact of AI and its actual adoption within the SME sector.

The research also highlights generational differences in the uptake of AI. Millennials are making the most use of these tools, with 39% using AI either daily or several times a week. This compares to 17% for Generation X and 13% for Baby Boomers, indicating a variance in confidence and familiarity with AI based on age.

"For technology to drive meaningful change, it needs to be in the hands of everyone. That means investing not just in access to tools, but in the training, support and confidence people need to actually use them. Closing the AI advantage gap is essential - not just for the success of individual companies, but for improving productivity across the UK economy. We need a trickle-down, human-centred approach to AI adoption. One that starts with leadership, but quickly and intentionally reaches every corner of the business."

Those comments were made by Kevin Fitzgerald, Managing Director at Employment Hero, in response to the report's findings. He emphasised the need to ensure staff at all organisational levels have the training and support required to adopt new technologies, especially AI, in their daily work.

As larger firms increasingly pursue automation and upskilling initiatives, the data from the Employment Hero report suggests that SMEs will require targeted support if they are to keep up with developments in technology. If smaller businesses are unable to address this gap, the report warns they face being overtaken by more technology-driven competitors.

Employment Hero commissioned the research in early 2025, surveying leaders and employees from organisations with fewer than 1,000 staff across all sectors, age groups, and regions of the UK. The survey aimed to provide insight into how business and workplace practices are evolving nationwide, especially in light of technological change.

The report's findings provide a snapshot of the current state of AI adoption among UK SMEs and suggest several areas in which businesses may need to focus if they wish to remain competitive in a technology-driven landscape.