AI Drives Tech Salaries Up 20% While Cutting Entry-Level Jobs

Xcede, a specialist technology recruitment firm, has released its 2026 UK Salary Guide, revealing that salaries for artificial intelligence (AI) and data roles have risen by up to 20%, with senior roles such as AI & Research Science now commanding up to £181,000 and Data Engineering reaching up to £150,000.

The report also identifies a contrasting trend: entry-level hiring has contracted sharply, even as junior salaries have increased, pointing to a market defined by intense competition for a shrinking number of roles.

The findings present a two-speed picture of the UK technology labour market in 2026. Demand for AI engineers, machine learning specialists, and senior data professionals continues to grow, while the broader hiring landscape contracts.

According to LinkedIn Labour Market data cited in the report, job postings requiring AI literacy skills are up 70% year-on-year, expanding well beyond traditional technical roles. At the same time, AI has generated more than 1.3 million new jobs globally over the past 3 years, with forward-deployed engineer roles growing 42% and AI engineer roles growing 13x since 2023.

“The start of 2026 saw many forecasts paint a bleak picture for the UK labour market, with predictions of a potential market collapse and an 11-year high in unemployment reaching almost 5.4%,” said Matthew Jones, Sales Director at Xcede. “In reality, the markets we operate in told a more nuanced story. 2025 proved to be a year of growing confidence across the technology hiring landscape, particularly in the second half of the year.”

The report highlights a growing structural imbalance at the base of the market. LinkedIn data referenced in the guide shows that 2025 recorded the highest number of computer science graduates across the 2017–2025 period, while entry-level software engineering hiring on LinkedIn fell to its lowest point over the same timeframe.

Despite increases in junior-level salaries over the past year, entry-level hiring activity remains extremely limited, with the report noting that the highest number of applicants per vacancy and the lowest LinkedIn hiring rate since July 2020 were both recorded in July 2025.

The guide identifies a clear shift in how organisations are structuring their technology teams. Rather than expanding headcount, businesses are building leaner, higher-impact teams, often expecting broader capability from each hire rather than narrowly defined skill sets.

Return-to-office expectations have continued to firm across much of the market, and performance standards are rising. In some high-growth and AI-led environments, the report notes signs of more intense delivery cultures emerging, with greater emphasis on output, pace and commercial impact.

Technical proficiency alone no longer defines the most sought-after candidates. The report states that employers are increasingly seeking candidates who combine strong technical capability with distinctly human skills such as adaptability, problem-solving and communication.

The most in-demand profiles are those that blend AI expertise, ranging from hands-on engineering to broader AI literacy with these human capabilities, giving organisations a clear competitive advantage.

Salary growth was strongest in Data and AI disciplines, where permanent salaries rose across most roles in 2025, with junior and mid-level increases typically ranging from 8–20%. The disciplines recording the most consistent uplifts across all seniority levels were Data Engineering, Analytics Engineering, Machine Learning Engineering, and AI & Research Science.

In the Product sector, AI Product Management and Technical Product Management experienced the most pronounced uplift, particularly at senior and lead level, with Head of Product positions reaching £137,000. Software engineering salaries rose more modestly, with most roles seeing increases of around 5–10%.

The report raises a longer-term concern for the sector, drawing on commentary from Niall Wharton, Associate Director for Data & AI at Xcede. “This lack of junior hiring presents a longer-term risk for the sector,” Wharton said. “As companies lean on AI and automation to replace entry-level work, the pipeline of future senior engineers is narrowing, potentially creating significant skills gaps in the years ahead.”

Jones added: “At the same time, the market has become more selective. Organisations are building leaner, higher-impact teams, often expecting broader capability from each hire rather than narrowly defined skill sets. What is clear is that expectations of talent have risen, and the value placed on high-performing, adaptable professionals has never been greater.”

The Xcede 2026 UK Salary Guide covers 6 technology disciplines, Data & AI, Product, Software, Cloud, Cyber, and C-Suite. It provides detailed salary benchmarking data for permanent and contract roles across all seniority levels. The full guide is available here – https://www.xcede.com/blog/xcede-2026-uk-salary-guide.

About Xcede

Founded in 2003, Xcede is a specialist technology recruitment firm headquartered in London, UK. The company provides global transformational talent across 6 disciplines: Data, AI & Machine Learning, Product, Software, Cloud, and Cyber. Xcede works with businesses ranging from pioneering start-ups to global brands, placing project-based and permanent professionals who enable innovation.