The perfect storm: Technology, talent and transformation

This year, digital transformation has been both an opportunity and a challenge for SMEs, as artificial intelligence (AI) and automation become essential to staying competitive.  

And with talent and skills in flux, businesses have been racing to keep up. 

In this, the second of a two-part series looking back at 2025, we speak to leaders from across our network about how technology and talent have impacted SMEs around the world. 

Across markets, a clear pattern has emerged.  

SMEs want the benefits of AI, but their ability to capture its value depends heavily on skills, strategy and scale.  

For some countries, it’s full steam ahead, for others, it’s a more cautious approach. 

Across Africa, SMEs are moving ahead with what’s readily accessible. 

“SMEs are fully embracing public AI tools like Copilot and ChatGPT, but few have the resources to build bespoke solutions. This highlights a growing gap between adoption and deeper integration,” says Chakib Zaari, managing partner at Baker Tilly in Morocco. 

Poland sits in the middle of the curve. 

Interest has surged across sectors, explains Wojciech Sztuba, managing partner of network member firm TPA Poland, but uptake has remained uneven as skills shortages and capability gaps have held firms back.  

“Large-scale national technology initiatives have helped nudge SMEs forward, but transformation is still a work in progress,” notes Dr Sztuba. 

Businesses across Germany have recognised the enormous potential of AI. 

“In innovation-led sectors, AI is now standard practice, and even traditionally cautious industries have recognised its transformative potential. Adoption is broadening, deepening and moving from experimentation to execution,” says Ralf Groening, managing partner at Baker Tilly in Germany.  

In neighbouring France, the approach is more cautious, despite leaders increasingly viewing AI and automation as powerful drivers of productivity and growth.   

“While adoption is accelerating and people are becoming more open to using AI, leaders are seeking practical ways to implement technologies. They want to ensure a clear return on investment amid ongoing cost and skills challenges,” explains Laure Mounier, group CEO of Baker Tilly in France. 

In the US, SMEs are mixed in their approach.  

“Most agree that embracing AI is good for business, but many lack a coherent adoption plan,” says Fred Kostecki, St. Louis managing partner at US network member firm RubinBrown.  

“So, while firms are adopting AI, without a long-term roadmap they can’t unlock its full competitive advantage. This will continue to evolve.” 

Across Latin America, SMEs fall into one of two groups. 

“Most are not early adopters. It’s the region’s fastest-growing start-ups that are pulling traditional sectors forward,” says Manuel Aguilar, managing partner at Baker Tilly in Mexico.  

“Finance, retail and services remain the most tech-savvy and AI-ready.” 

As cost pressures intensified this year, Canadian SMEs turned to AI, not simply to do more, but to do more with less.  

"With a recent global study showing that around seven in ten enterprises now leverage AI, we’re seeing tangible shifts,” observes Ben Lloyd, CEO of Baker Tilly in Canada 

“Automation is reducing labour-intensive back-office effort, predictive analytics are minimising waste and rework, and AI-driven insights are enabling faster, more confident decision-making. 

“But the real advantage lies with those leaders who are embedding AI into the fabric of the business – from how revenue is generated to how client experiences are delivered.” 

Indian SMEs are in a fast-moving but uneven phase of AI adoption, and the gap between leaders and followers is widening, explains Ajay Sethi, managing partner at Baker Tilly ASA in India.  

“Many SMEs are shifting from basic digitisation to using AI for automation, analytics, personalised marketing, demand forecasting and content creation, helped by cloud-based AI services. Yet deeper integration is limited by scarce talent, unstructured data, high implementation costs and low awareness of sector-specific solutions.  

“A dynamic minority is advancing quickly, while most are still struggling with legacy systems and financial and capability gaps.” 

In Australia, awareness is outpacing strategic implementation.   

“Our 2025 Business Radar report showed that 72% of Australian SMEs are already using AI tools,” says Gavin Debono, partner at Australian network member firm Pitcher Partners.    

“Yet only 13% have tuned AI into a fully funded strategic priority. And the barriers are clear: technical and compliance issues, capability gaps, lack of trust in AI outputs, financial constraints and resistance born from fear of job losses.  

“It’s those Australian businesses in expansion mode and those with 100–250 employees that are feeling most prepared to drive AI adoption and transformation.” 

SMEs often lack the security budgets and controls of larger organisations, making them prime targets for cybercriminals as ideal entry points into global supply chains.   

While the threat is rising everywhere, awareness in Africa remains low, says Mr Zaari, with many SMEs not viewing themselves as targets and therefore staying largely unprepared. 

In other regions, the risk is understood, but preparedness varies. 

In Latin America, SMEs understand the threat but remain poorly equipped to prevent, or handle, attacks, notes Mr Aguilar.  

By contrast, cybersecurity is now a board-level priority for French SMEs.  

“The French authorities have been very vocal in educating businesses that SMEs are prime targets for cybercriminals, and the message has hit home,” says Ms Mounier.  

Cybersecurity threats are rising sharply in India as rapid digitisation pushes SMEs online without adequate protection.  

“SMEs hold valuable customer data and supply-chain access, but they often lack the budgets and expertise for strong security,” says Mr Sethi.  

“This makes them prime targets, and incidents like ransomware and data theft have been increasing across the country.”

Workforce pressures intensified in 2025, and SMEs everywhere felt the strain – but the pain points have varied sharply by region. 

In India, demand for talent outstripped supply.  

“SMEs are struggling to compete with large corporates on pay and career progression while specialist skills remain in critically short supply. Digital, AI, aerospace manufacturing, semiconductors and healthcare workers are among the scarcest, leaving SMEs battling both retention and capability gaps,” notes Mr Sethi.  

In Germany, talent shortages are deeply sector-specific, explains Mr Groening.  

“Many industries are constrained by a chronic lack of skilled workers, and this has become their single biggest barrier to growth. Others have paused hiring altogether while avoiding layoffs. Unemployment has now crossed the three million mark for the first time since 2015, adding another layer of complexity.” 

In Poland, labour conditions have remained tight.  

“Ultra-low unemployment has continued to push wages, intensified by a minimum-wage hike at the start of the year. Skills gaps, particularly digital ones, have kept reskilling high on the SME agenda,” says Dr Sztuba. 

Across Latin America, rising welfare and social policy costs have made hiring significantly more expensive.  

Senior-level talent drain was once a major issue, explains Mr Aguilar. However, tighter US visa restrictions have reversed the flow, keeping more experienced workers in the region. 

In Africa, SMEs face the most fundamental constraints: severe talent scarcity and rising labour costs.  

“This has left many SMEs struggling to build the capabilities they need to scale,” says Mr Zaari.  

Meanwhile in Canada, firms aren’t just hunting for talent, they’re investing in their current teams, explains Mr Lloyd.  

“SMEs are investing heavily in digital literacy, data skills and advisory-ready competencies, shifting toward human-centric work models where flexibility, autonomy and continuous learning are the norm.” 

The global pandemic forced businesses around the world to rethink how – and where – works gets done. But five years on, is flexibility and hybrid work still a priority for SMEs?  

While most regions are using flexibility and continuous learning to attract and retain talent, North Africa appears to be the exception.  

“Very few SMEs across North Africa have adopted hybrid work,” says Mr Zaari.   

In Europe, the story is different.  

In Germany, SMEs now see hybrid work, flexibility and ongoing upskilling as key to staying competitive in the talent race.  

“These shifts are boosting productivity and employee satisfaction, cementing flexible work as a strategic priority rather than a perk,” says Mr Groening. 

In Poland, most SMEs have settled into stable hybrid arrangements, guided by remote-work rules in the Labour Code.  

“Only a minority attempted to restrict remote working and pull employees back to the office,” explains Dr Sztuba. 

“Digital upskilling has remained a central focus as firms work to close persistent skills gaps.” 

Structured arrangements are also taking centre stage in India.  

“SMEs are increasingly adopting hybrid models to access talent in tier 2 and tier 3 cities and using flexible schedules to enhance employee work-life balance. Low-cost digital learning platforms and microlearning modules are being favoured to enable rapid upskilling in both technical and soft skills, which are vital for retention and competitiveness,” says Mr Sethi.  

In Mexico, SMEs know they can’t outbid large companies on compensation, so they’re modernising their talent strategies instead.  

“Many are adopting more flexible work models and contemporary approaches to attraction and retention to stay relevant in a tightening labour market,” says Mr Aguilar. 

Looking ahead

As we look towards 2026, we asked leaders from across our global network what one piece of advice they’d give leaders of SMEs.