Technology and a global talent crunch are reshaping the future of the mid‑market

Rapid advances in artificial intelligence (AI) and automation are transforming the foundations of mid‑market businesses internationally, with the speed of technological change colliding with a deepening global talent shortage for experienced staff.  

This tension between accelerated AI and automation and increasingly scarce human capability for specialist skills is set to become the defining challenge for mid‑market leaders over the next decade, according to The mid‑market maze, a report published today by Baker Tilly International. That scarcity of talent was cited by 60% of respondents as the single greatest constraint on mid-market growth by 2035. 

The study, based on scenario planning and detailed opinion research carried out among 1,500 CEOs and other C-suite of mid-market businesses with a turnover of US$50m to US$1bn in nine leading markets globally, shows that while organisations are investing heavily in AI, automation and digital transformation, they fear these same technologies may undermine the development of future leaders.  

Balancing technology transformation and human value 

More than half of executives (57%) anticipate a crisis of leadership emerging as technology reshapes or replaces the entry and mid‑level roles that once acted as training grounds for senior talent.  

“AI and automation are rapidly rewriting business models but also disrupting the development of the next generation of leaders,” said Francesca Lagerberg, CEO of Baker Tilly International. “Mid‑market organisations must find a new balance where automation accelerates innovation without eroding human capability. After all, human values will matter more, not less, in a technology saturated world.” 

Political volatility and short termism will be the norm in 2035 

The report identifies a future world, described as “The compliance crunch”, as the scenario most aligned with leaders’ expectations of what’s to come. This is an environment defined by fast‑moving, prescriptive regulation and constrained access to the vital resources that fuel business growth, from access to capital, to specialist labour and energy, to raw materials and components.  

Political volatility is already shaping this future. More than one‑third of organisations (35%) globally say they have delayed or cancelled major investments due to rapid shifts in policy direction. In Germany, where leaders report intense regulatory pressure, this rises to 41%, the highest of any country surveyed. By comparison, companies in the UAE report the lowest rate of disruption, with only 30% postponing investment due to political swings. 

Compliance takes a back seat 

Business leaders expect back-and-forth policy changes driven by political oscillation to become more acute, with 6 in 10 predicting an increasing pace of regulatory change over the next decade and just 18% anticipating a slowdown. 

In the compliance crunch world, organisations face tight but shifting rules. Yet Baker Tilly’s research indicates that while leaders are concerned about a hyper‑regulated future, they are still not giving compliance the precedence it needs. 

Regulatory compliance and governance are at the bottom of the list of organisations’ current investment priorities, along with sustainability and environmental, social and governance (ESG) initiatives: 21% of leaders say neither of these are a priority for their organisation. 

Many organisations may be underestimating how quickly AI-related regulation is evolving and how materially it will reshape operational, data and governance requirements. Those that fail to build compliance capabilities now may struggle to keep pace as regulatory scrutiny intensifies, particularly in technology.  

Mid-market well positioned but are leaders? 

Though the decade ahead promises turbulence, the report underscores that the mid‑market holds innate advantages. Executives highlight faster decision‑making, closer access to senior leadership, lighter bureaucracy and greater agility as structural strengths that position mid‑sized firms to pivot and innovate quickly in volatile conditions. These qualities, the report suggests, could prove decisive in a world where regulatory guidance shifts rapidly and resource bottlenecks appear without warning. 

However, the report also sounds a clear warning around leadership readiness. While leaders overwhelmingly agree that skills such as effective communication, ethical judgement and the ability to lead through uncertainty will be essential by 2035, few respondents identify these as personal strengths today.  
 
Only 5% of leaders rank ethical decision‑making among their top three capabilities, despite nearly three‑quarters (73%) believing it will be a critical differentiator in the future. Executives also acknowledge that resilience, another attribute essential for navigating volatility, is undervalued and underdeveloped across their leadership teams. 

Francesca concludes: “The decade to 2035 will demand a new form of leadership: one that can leverage technology without losing sight of human value, act decisively in the face of uncertainty, and anticipate change rather than react to it. Successful organisations will be those that invest early in capability and culture, building resilience through strong governance, strategic foresight and trusted partnerships.”