Telecom Executives See AI Productivity Gains but Face Talent Gaps

Nearly all telecommunications executives anticipate substantial productivity improvements from artificial intelligence over the next five years, but significant gaps in talent, operating models, and strategic clarity may prevent them from capturing the full value, according to new research from EY-Parthenon.

The firm's Telco of Tomorrow study, conducted biennially with nearly 100 C-suite leaders from global telecommunications companies, found that 97% expect AI to deliver major operational performance gains by 2031. Leaders are prioritizing AI deployment across customer care and issue resolution (92%), network optimization (67%), and service personalization (38%).

Yet organizational readiness appears to trail ambition. More than half of executives (54%) cite budget constraints as a transformation barrier, while 43% point to insufficient current skills. Perhaps most telling, 34% identify a lack of clarity around their strategic direction as a key obstacle.

Workforce transformation on massive scale

The study reveals an impending workforce disruption of remarkable scope. Nearly 69% of executives expect three-quarters of their employees to be either upskilled or replaced within five years as organizations adapt to AI-enabled operating models.

This transformation faces a recruitment challenge: only 31% of leaders believe telecommunications will rank among the most attractive industries for employees in five years. The sector must simultaneously retrain existing staff while competing for scarce AI talent in a tight labor market.

"The workforce challenge extends beyond reskilling," said Cédric Foray, EY Global Telecommunications Sector Leader, as reported by EY. "Telecom companies must also rethink organizational structures, redesign roles and processes, and develop new leadership capabilities to support the next phase of transformation."

Beyond connectivity: New revenue streams emerge

With modest growth in traditional connectivity services, half of executives now identify non-core services as a leading growth catalyst—up from 34% in the 2024 study. Key focus areas include cybersecurity, sovereign cloud services, AI infrastructure, and GPU-as-a-service offerings.

This strategic shift reflects changing competitive dynamics. Two-thirds of executives view satellite operators as a major disruption source within five years, particularly as low-Earth orbit services expand into underserved markets. Meanwhile, hyperscalers present a dual challenge: they're simultaneously becoming competitors in enterprise markets and essential ecosystem partners for AI infrastructure.

Notably, 64% of executives now view superior customer understanding as a critical competency for future success, compared with 49% who cite network quality—suggesting a fundamental reorientation toward service differentiation beyond infrastructure.

Why it matters

The telecommunications industry sits at a strategic inflection point where AI promises to reshape operations, but success depends on organizational transformation rather than technology deployment alone. With 47% of leaders prioritizing business model overhauls to accelerate non-core growth, the sector is attempting simultaneous workforce transformation, competitive repositioning, and revenue diversification—a complex agenda that will separate winners from laggards over the next five years.

The findings were first reported by EY in their Telco of Tomorrow study, released September 16, 2026.