How the defence sector is battling a skills crisis

By a Senior Financial Correspondent BBC Business (Finance), 2 January 2026

As geopolitical tensions escalate and governments across the West ramp up military spending, the defence sector is confronting a critical vulnerability far from the battlefield: a severe and widening skills crisis. The United Kingdom, like its allies, is channelling unprecedented investment into next-generation military technology, yet the industry tasked with delivering it is struggling to attract the talent required. This shortfall threatens not only to undermine national security ambitions but also to derail plans for the high-tech defence industry to serve as a key engine of economic growth.

The challenge is stark. The UK's Ministry of Defence has earmarked £1 billion for AI-powered battlefield systems and established a new Cyber and Electromagnetic Command, signalling a clear pivot towards a digital-first military. However, the engineers, data scientists, and cybersecurity experts needed to realise this vision are the same individuals being aggressively courted by global technology firms and the wider corporate world, creating a fierce battle for a limited pool of talent.

The Anatomy of the Crisis

The skills gap is not a single problem but a complex matrix of shortages spanning the entire industry, from the factory floor to the research lab. Government analysis this summer confirmed the sector's "strong requirement for STEM skills" while noting widespread "concerns expressed about a shortage of these skills coming from the school system."

The specific deficits are multi-layered:

• Traditional Skills: A persistent shortage of foundational craft expertise remains a core issue. The industry is in constant need of qualified electrical engineers and specialist welders, roles that are essential for manufacturing and maintaining complex military hardware.

• Digital Frontiers: The most acute pressure point is the competition for talent in high-growth technology fields. Specialists in digital engineering, artificial intelligence, machine learning, and cybersecurity are in desperately short supply as the defence sector competes directly with the lucrative and culturally dominant tech industry.

• Future-Facing Roles: As the sector adapts to new environmental and operational demands, emerging gaps are appearing in novel skill sets, including those related to developing "green" or more sustainable defence technologies.

Headwinds in the Hunt for Talent

The roots of the recruitment challenge are deep and varied, extending beyond simple market competition into issues of ethics, perception, and workplace culture.

The Ethical Dilemma For a growing segment of the emerging workforce, the fundamental mission of the defence industry presents an ethical barrier. The experience of "Caleb," a recent computer science graduate, is illustrative. Despite the appeal of a good salary, clear career path, and job security, he turned down a role in the sector because the prospect of working on lethal technology "didn't sit well" with him.

This sentiment is particularly pronounced among younger generations. "Gen Z have got a different mindset when it comes to what they want from work, and morals, ethics, come into it," notes Louise Reed, Future Skills Director at the recruitment firm Reed. "They want to work for very green companies that give back and have a purpose."

This shift in priorities is compounded by what some observers see as a change in public perception. Phil Bearpark, a specialist in defence recruitment at Reed Talent Solutions, suggests that broad public support for the military may not be as strong as in previous eras. "Does that leak into the defence industry? I'd say yes, it's intrinsically linked," he states.

An Image Problem Beyond ethics, the defence sector is battling a perception that it is a rigid, conservative, and technologically stagnant industry. For top-tier tech talent, the prospect of working on legacy systems can be a significant deterrent.

Alex Bethell, a final-year computer systems engineering student at the University of Bath, voiced this concern after completing an industry placement at a defence-related firm. While he enjoyed the work, he worries about the risk of being assigned to maintain systems that could be 40 years old. His cohort, he explains, wants to be "at the cutting edge," focusing on design and innovation. This perception often makes smaller, more agile start-ups appear more attractive than the industry's traditional "prime" contractors.

A Narrowing Recruitment Funnel The industry's historical reliance on ex-military personnel for technical and strategic roles further compounds the problem. While these individuals are "the subject matter experts" who understand the customer's operational needs, as Mission Decisions CEO Colin Hillier explains, this practice significantly reduces the pool of potential candidates.

Mr. Hillier, whose firm develops AI technology for defence, argues that for engineering roles, casting a wider net is essential. "In fact, sometimes it's better that you're not [ex-forces], because you're more likely to have other skills that we might use."

A Strategic Counter-Offensive

Recognising the existential threat posed by the skills gap, the defence industry is mounting a multi-pronged effort to change its narrative, modernise its culture, and build a sustainable talent pipeline.

Reframing the Mission

A key strategy involves shifting the focus from purely lethal applications to the sector's broader contributions to society. Industry leaders are working to highlight the dual-use nature of their technology.

• Purpose-Driven Narrative: Companies are emphasising their role in humanitarian aid, disaster relief, and national security in its widest sense. "If you look at what the defence sector does, a very small proportion is making a kinetic thing that blows up," says Colin Hillier. He points out that the same Royal Navy helicopters used in military operations are also deployed for sea rescues and disaster response.

French technology giant Thales, which has a substantial UK presence, is actively promoting its work in cybersecurity and protecting critical national infrastructure. "We also create a huge amount of technology that protects people through every facet of their life," says Lindsey Beer, Thales UK HR Director.

Cultivating the Next Generation

To counter negative perceptions and build a long-term STEM pipeline, major firms are engaging in extensive outreach. Thales, for example, runs programs that extend down to the primary school level to demystify its work and encourage broader interest in science, technology, engineering, and mathematics.

Modernizing the Workplace

To retain the talent it does attract, the industry is also addressing concerns about career stagnation. Thales encourages internal mobility, allowing employees to upskill and move between functions, such as from procurement to program management or into newly created digital roles. This approach directly counters the fear of being locked into maintaining legacy systems and demonstrates a commitment to continuous professional development.

The Stakes for Security and the Economy

The battle for talent is more than an internal HR issue for the defence sector; it has profound implications for the UK's future. The success or failure of these initiatives will directly impact the nation's security posture and its economic ambitions.

The path forward is clear but challenging. The industry must successfully rebrand itself as an innovative, purpose-driven sector that offers cutting-edge technological challenges. Failure to bridge the skills gap carries significant risks:

• Strategic Vulnerability: An inability to develop and deploy advanced systems could leave the UK and its allies at a critical disadvantage in an increasingly volatile world.

• Economic Drag: The government's goal of using the multi-billion-pound defence industry as a high-tech growth engine for the wider economy will be unattainable if the talent pipeline runs dry.

• Innovation Stagnation: Without a steady influx of new minds, the sector risks becoming a custodian of past glories rather than a creator of future security, ceding the technological high ground to global competitors.