Kyndryl Readiness Report: AI’s Early Gains Drive Enterprises to Inflection

Businesses report AI momentum – but foundational gaps in tech and talent now define the next phase of progress

NEW YORK, Oct. 20, 2025 — Kyndryl (NYSE: KD), a major player in mission-critical enterprise services, released its second annual Kyndryl Readiness Report today, based on data from 3,700 senior leaders across 21 countries. The report paints a picture of both progress and persistent challenges. While businesses are seeing increased returns on their AI investments, they’re also facing significant pressure to modernize their IT infrastructure, scale their innovation initiatives, upskill their workforces, and navigate an increasingly complex and fragmented regulatory environment.

“A readiness gap is emerging as enterprises try to realize the transformative potential of AI,” said Martin Schroeter, Chairman and CEO of Kyndryl. “While 90% of organizations believe they have the right tools and processes to scale innovation, over half are held back by their underlying tech stack, and fewer than a third believe their employees are truly ready for AI adoption. Closing that gap is the key challenge and opportunity ahead.”

Last year’s report highlighted a disconnect between perception and reality: While 90% of business leaders thought their IT infrastructure was top-tier, only 39% considered it prepared for future disruptions. While momentum has been gained, this tension persists, especially considering these new findings:

• ROI on the rise, but AI stuck in experimentation phase: While 54% of organizations are reporting positive returns on AI investments – a 12-point increase from 2024 – 62% still haven’t moved their AI projects beyond the pilot stage. This suggests that while AI’s potential is recognized, scaling it remains a significant hurdle. The reasons for this “pilot purgatory” are multifaceted. They include difficulties in integrating AI into existing systems, securing buy-in from key stakeholders across the organization, and a lack of clear, measurable goals for AI initiatives.
• Confidence continues to outweigh capability: While 90% say their tools and processes enable rapid testing and scaling of new ideas, over half admit their foundational technology stack is hindering innovation. This indicates a potential overestimation of internal capabilities, highlighting the importance of objective assessments of infrastructure readiness. The reality is that many legacy systems simply aren’t designed to handle the demands of modern AI applications, which require significant computing power, large datasets, and real-time processing capabilities.
• AI driving workforce transformation, but skills gaps remain: 87% believe AI will “completely” transform jobs at their organizations within 12 months, yet many organizations report low AI usage among employees and a shortage of necessary technical skills. This underscores the urgent need for comprehensive reskilling initiatives to ensure employees can effectively leverage AI tools and adapt to evolving job requirements. Failure to address this skills gap could result in underutilized AI investments and a workforce ill-equipped for the future of work.
• Geopolitical pressures forcing a data pivot: While organizations acknowledge the benefits of cloud adoption, they’re now reevaluating data storage, processing, access, and security strategies in light of an increasingly fragmented regulatory landscape. The report also found that 70% of CEOs admit their cloud setup was reached “by accident rather than design,” implying a lack of strategic planning in their initial cloud migrations. The evolving regulatory landscape, particularly concerning data privacy and sovereignty, is forcing businesses to re-architect their cloud environments, potentially leading to increased complexity and costs.

AI spending rises along with ROI expectations – with cyber resilience top of mind

Business leaders across industries and countries report a 33% average increase in their company’s AI spending since last year, with 68% investing “heavily” in at least one form of AI. This surge in investment is accompanied by heightened pressure to demonstrate value and protect those investments. Three in five leaders report feeling more pressure this year to deliver ROI from AI than last. A top priority for AI application? Cybersecurity. This suggests that businesses are increasingly viewing AI as a critical tool for enhancing their security posture, automating threat detection and response, and mitigating cyber risks.

Cloud is under pressure as geopolitical and regulatory disruption drive change

Many organizations are revisiting their cloud infrastructure due to new global regulations and concerns about data sovereignty. Three in four leaders express concerns about geopolitical risks associated with storing and managing data in global cloud environments, and 65% have adjusted their cloud strategies in response – by investing in data repatriation, reassessing vendors, and shifting toward private cloud models. This trend indicates a growing emphasis on data control and compliance, potentially leading to a shift away from fully public cloud deployments towards hybrid or multi-cloud architectures that offer greater flexibility and control over data location and security.

Talent and Culture – the next readiness frontier

As leaders seek to scale innovation, people readiness is emerging as a key barrier – and a key opportunity. While nearly 9 in 10 believe AI will completely reshape jobs in the next year, only 29% feel their workforce is ready to successfully leverage the technology, indicating concerns around the skills needed for future success. Many organizations are also struggling with cultural barriers – with nearly half of CEOs reporting their organization stifles innovation (48%) and moves too slowly in decision-making (45%). Those excelling in these areas – identified as “Pacesetters” in the report – are prioritizing culture, upskilling, and leadership alignment alongside innovation investments.

Compared to organizations lagging in these areas, Pacesetters are:

• 32 percentage points less likely to cite their tech stack as a barrier
• 30 percentage points more likely to say their cloud can adapt to new regulations
• 20 percentage points less likely to report a cyber-related outage in the past year

To read the report, visit Kyndryl’s Readiness Report.

Methodology

The 2025 Kyndryl Readiness Report combines survey data from 3,700 senior leaders and decision-makers across 21 countries with insights from Kyndryl Bridge, the company’s AI-powered, open integration digital business platform. The Report uncovers the drivers, barriers and trade-offs that can make or break the ability of organizations to protect, sustain and accelerate their performance and future-proof their mission-critical processes.

About Kyndryl
Kyndryl (NYSE: KD) is a leading provider of mission-critical enterprise technology services, offering advisory, implementation and managed service capabilities to thousands of customers in more than 60 countries. As a key player in IT infrastructure services, the company designs, builds, manages and modernizes the complex information systems that enterprises rely on every day. For more information, visit www.kyndryl.com.