Businesses buying AI faster than they can make it pay, Manchester research finds

University researchers warn that companies are failing to turn faster working into higher profits, although better use of artificial intelligence could add up to 0.7 percentage points to annual UK productivity growth

Businesses are investing in AI faster than they can turn it into measurable financial returns, according to new research suggesting that most companies have yet to realise the technology’s promised productivity benefits.

A new report released today by The Productivity Institute at the University of Manchester, commissioned by FTSE 250 technology company Bytes Technology Group, found that 89 per cent of organisations use AI in at least one business function, yet only six per cent attribute five per cent or more of their operating profits to it.

Fewer than half have progressed beyond pilot projects, while only one-in-four has redesigned working practices to take advantage of the technology.

The findings suggest that although AI can dramatically accelerate individual tasks, those improvements are frequently lost when work moves through the wider organisation.

Research reviewed for the report found that customer service employees using AI assistants handled 14 per cent more enquiries per hour, while professionals completed writing and analytical tasks 40 per cent faster.

Software development revealed an even greater discrepancy. AI coding tools increased coding activity by around 240 per cent, but software releases rose by just 30 per cent as employees still had to review, test and deploy the additional work.

Professor Bart van Ark, of The Productivity Institute, said: “AI’s productivity potential becomes real when faster tasks lead to better performance across the business. The ambition gap lies between those individual efficiencies and sustained business results. Closing it requires firms to invest in management, skills and the redesign of workflows alongside the technology.”

The report, The AI Ambition Gap: Aligning Capabilities for Productivity, draws on published international research and eight interviews with experts from business, academia and government.

Its authors found that better-managed UK companies were more likely to adopt AI, regardless of their size, age, industry or location.

They also warned that businesses often face substantial upfront costs from retraining employees, reorganising operations and improving data systems, with financial benefits taking longer to materialise.

Sam Mudd, chief executive of Bytes Technology Group, said: “AI takes extraordinary capital to build and almost nothing to try, so it is arriving in every organisation whether leaders have a plan or not.”

She added: “Across our customer base, companies in the same sector are making completely opposite bets, from licences for every employee to nothing at all. Neither guarantees results.”

Despite the difficulties, researchers estimate that more effective adoption could add between 0.5 and 0.7 percentage points annually to UK productivity growth.

The UK could be particularly well placed to benefit, with a comparison of six countries finding that it had the highest proportion of workers in occupations where AI could complement existing skills rather than replace them.

Its financial services, professional services and advanced manufacturing industries were identified among those with opportunities to improve productivity.

The researchers concluded that businesses should invest in staff training, management and changes to working practices alongside new technology, while government could help through clearer sector-specific rules and stronger support for businesses adopting AI.

READ MORE: AI could ‘help pharmaceutical companies spot clinical trial problems before they escalate’. Clinical Maestro founder Anca Copaescu has called for a more proactive approach to managing outsourced medical research, using enterprise software, connected data and artificial intelligence to identify financial and operational risks earlier.

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_{Main image: New research from the University of Manchester suggests that while AI can help employees complete individual tasks much faster, most businesses are struggling to turn those time savings into higher productivity and profits. Credit: Pavel Danilyuk / Pexels}