UAE’s AI Ambitions Collide With Infrastructure Limits, Kyndryl Report Warns
New readiness data reveals that a majority of UAE businesses expect AI to transform jobs within a year, while few feel prepared.
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Kyndryl has released the UAE edition of its second annual Readiness Report, offering a clear snapshot of how the country’s AI ambitions are colliding with the realities of outdated legacy infrastructure, cybersecurity exposure, and widening skills gaps. The findings show a business landscape rushing to operationalize AI while still struggling to modernize the foundations required to support it.
According to the report, pressure on UAE organisations to demonstrate returns on AI investments has intensified sharply, with 70% of leaders citing higher demands for measurable ROI compared with last year. Yet experimentation continues to outpace implementation. Nearly two-thirds of enterprises say AI projects falter after the proof-of-concept stage, largely due to unresolved issues in legacy systems and fragmented technology environments.
In effect, the country’s rapid adoption curve is constrained by its own underlying architecture.
This tension is reflected in what the report calls a “confidence-capability gap.” While optimism remains high, most organisations acknowledge persistent structural hurdles: 91% say they are struggling to keep pace with technological change, 26% cite complexity in their IT ecosystems as a barrier to scaling, and nearly a quarter point to misalignment between business and technology teams.
The labour market implications are equally stark. 93% of UAE leaders believe AI will radically transform roles within their organisations over the next year, yet many remain uncertain about how to prepare their workforce for that shift. Thirty percent are unsure how to reskill staff impacted by automation, and more than 40% report deficits in both cognitive and technical capabilities needed to leverage AI effectively.
The report frames this as a critical inflection point: without a coordinated upskilling strategy, organisations may struggle to capture AI’s projected productivity gains.
Cybersecurity adds another layer of urgency. Though 86% of UAE organisations experienced a cyber-related outage in the past year, only a minority have deployed robust protections or undertaken broader infrastructure upgrades. As AI systems expand the attack surface, this gap poses operational and even geopolitical risks — a concern already reshaping cloud strategies.
More than two-thirds of the respondents have begun shifting toward private cloud models, vendor reassessment, or data repatriation.
