Technology and the Global Talent Shortage are Redefining the Future of the Middle Market
Global middle-market business leaders consider competition for specialized talent to be the primary constraint on growth over the next decade. Finding a balance between technology and talent will be key to preventing human value from being sidelined. An environment marked by prescriptive regulation and restricted access to resources is raising significant concerns.
Rapid advancements in artificial intelligence (AI) and automation are transforming the operational foundations of middle-market companies internationally, as the pace of technological change converges with a growing global shortage of specialized and experienced talent.
This tension between accelerating AI and automation, coupled with an increasingly limited human capacity for specialized skills, is shaping up to be the primary challenge for middle-market leaders over the next decade, according to The mid-market maze, a report published by Baker Tilly International. Talent shortage was cited by 60% of respondents as the main restriction on middle-market growth heading toward 2035.
"Middle-market organizations are struggling to win the battle for talent: many of the strongest profiles are drawn to large corporations or agile, well-funded startups capable of moving faster and making larger investments. If they seek to internally develop the next generation of leaders, they must offer clear career paths, flexible work arrangements, and accelerated training and upskilling processes, starting by strengthening business understanding in junior talent from an early stage." — Manuel Aguilar, Regional Chair, Latin America, Baker Tilly International and Managing Partner of Baker Tilly in Mexico
The study—based on scenario planning exercises and opinion research surveyed across 1,500 CEOs and C-suite executives of middle-market companies with revenues between US50millionandUS1,000 million in nine leading global markets—reveals that while organizations are investing heavily in AI, automation, and digital transformation, there is concern that these very technologies could undermine the development of future business leaders.
Balancing Technological Transformation with Human Value
More than half of executives (57%) anticipate a leadership crisis resulting from technology transforming or replacing entry-level and mid-level positions, which traditionally served as training grounds for future leaders.
"AI and automation are rapidly rewriting business models, but they are also disrupting the development of the next generation of leaders," said Francesca Lagerberg, CEO of Baker Tilly International. "Middle-market organizations must find a new balance where automation drives innovation without eroding human capabilities. After all, human values will be more important, not less, in a technology-saturated world."
Political Volatility and Short-Termism Will Be the Norm in 2035
The report identifies a future scenario termed The compliance crunch as the one most closely aligned with leaders' expectations of what lies ahead. This is an environment characterized by dynamic regulation and highly prescriptive policies, as well as limited access to critical resources for business growth—ranging from capital and specialized talent to energy, raw materials, and components.
Political volatility is already shaping this scenario. More than a third of organizations (35%) globally state they have delayed or canceled major investments due to abrupt changes in public policy. In Germany, where leaders report particularly intense regulatory pressure, this figure rises to 41%, the highest among the countries analyzed. In contrast, companies in the United Arab Emirates report the lowest level of disruption, with only 30% postponing investments due to political shifts.
In Mexico, we are experiencing a particularly complex combination: regulatory pressure, economic uncertainty, and accelerated technological transformation. For many medium-sized companies, the challenge is no longer just to grow, but to do so with structure, talent, and adaptability. Today, we see that the most resilient organizations are not necessarily the largest, but those that make more agile and strategic decisions
Regulatory Compliance Remains Low on the Priority List
Business leaders expect regulatory changes driven by political cycles to intensify even further: six out of ten believe the pace of regulatory change will increase over the next decade, while only 18% expect a slowdown.
In the compliance crunch scenario, organizations will face strict yet shifting rules. However, Baker Tilly's research shows that despite concerns over a hyper-regulated future, organizations are not yet giving regulatory compliance the necessary priority.
Regulatory compliance and corporate governance sit at the bottom of organizations' current investment priorities, alongside sustainability and ESG initiatives: 21% of leaders state that none of these topics represent a priority for their organization.
Many companies may be underestimating the speed at which AI-related regulation is evolving and the material impact it will have on operational, data, and governance requirements. Organizations that fail to build compliance capabilities now could struggle to keep pace as regulatory scrutiny increases, particularly regarding technology issues.
The Middle Market is Well Positioned… But Are Its Leaders?
Although the next decade promises high volatility, the report highlights that the middle market possesses significant structural advantages. Executives identify speed in decision-making, close access to senior leadership, reduced bureaucracy, and greater agility as strengths that allow medium-sized companies to adapt and innovate quickly in uncertain contexts.
Nonetheless, the report also issues a clear warning regarding leadership readiness. Although leaders widely agree that skills such as effective communication, ethical judgment, and the ability to lead through uncertainty will be critical by 2035, few consider these to be current personal strengths.
Only 5% of leaders place ethical decision-making among their top three capabilities, even though nearly three-quarters (73%) view it as a critical differentiator for the future. Furthermore, executives recognize that resilience—another key skill for navigating volatile environments—remains undervalued and underdeveloped within their leadership teams.
Francesca concludes:
"The decade leading to 2035 will demand a new form of leadership: one capable of leveraging technology without losing sight of human value, acting decisively in the face of uncertainty, and anticipating change rather than reacting to it. Successful organizations will be those that invest in capabilities and culture now, building resilience through robust governance, strategic vision, and trusted partnerships."
"One of the greatest challenges for the Mexican market in the coming years will be balancing technological adoption with talent development. Artificial intelligence is transforming business operations, but the true differentiator will remain the capacity to build leaders, generate trust, and maintain a strategic vision of the business in an increasingly changing environment." — Manuel Aguilar