UK firms are spending billions on hidden infrastructure costs — money they can’t spend on hiring or AI
- UK enterprises are overspending on infrastructure, and AI is making this more unpredictable
- AI platform and model licensing fees are more of an issue than token-based pricing models
- Companies are having to cut back on hiring and training as a result
New research has revealed UK businesses are losing £3.8 billion every year to unexpected infrastructure costs – a figure that rises to £47.4 billion across the UK, US, Japan, Italy, Germany, France, Australian and New Zealand.
And that’s not the amount that businesses are spending on infrastructure – it’s only the portion of cash being spend that they weren’t expecting to spend, the study from Wasabi and the Centre for Economics and Business Research (CEBR) found.
Around one-third (32%) of the overspending in the UK is attributed to AI and ML infrastructure, the research found, with one in five (22%) UK businesses describing this are of spending as ‘unpredictable’.
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Unexpected infrastructure spend is eye-watering, and AI is making it unpredictable
By far the highest infrastructure overspend category was AI platform and model licensing fees (66%), far ahed of token and usage-based charges (36%) even though the apparent ongoing shift from seat-based to consumption-based models has been criticized for making spend more unpredictable.
The scale of overspend is also particularly alarming, because nearly three-quarters (73%) of businesses globally reported either a moderate or significant budget pressure. Three in four (77%) British companies have also had to make at least one cost-driven trade-off during the previous 12 months, including cutting new hires across tech roles (38%), limiting their tech investments (37%) or spending less on worker training schemes (34%).
“This means hiring and investment in new technologies are postponed or reduced as budgets are redirected to cover unexpected charges,” CEBR head of economics advisory Owen Good summarized. “[Businesses] are blindsided by unpredictable infrastructure costs that prevent them from driving their innovation agendas forward,” Wasabi COO Marty Falaro added.
CEBR modelling quantified these impacts, noting that recovered money otherwise overspent on infrastructure could actually be redirected to support over 8,200 jobs.
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