RADAR
About this report
Each year, Pitcher Partners’ Business Radar looks into the trends, challenges and opportunities facing Australia’s middle market business leaders with independently commissioned research.
Our most recent survey, conducted in August 2025, captured the sentiment of nearly 150 middle market business owners and leaders across a range of growth stages, states and industries, focusing specifically on how leaders are navigating the rapid acceleration of AI adoption while maintaining business momentum.
Here, you’ll read how leaders are demonstrating confidence in AI’s transformative potential while taking measured, strategic approaches to implementation. We examine how middle market businesses are balancing the promise of AI-enabled efficiency gains with the practical challenges of technical readiness, workforce transformation, and competitive positioning.
We also explore how leaders are addressing the human dimension of AI adoption – from supporting employees through role changes to defining the unique value that only human skills can provide in an increasingly automated world.
Key findings
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Middle market confidence remains stable despite AI disruption concerns: Business leaders maintain steady confidence levels, though mature businesses show declining confidence (7.67 vs 8.00 average) as they view their size and legacy as potential disadvantages in AI transformation.
AI adoption is widespread but strategic implementation lags: While 93% of leaders are familiar with AI and 72% actively use AI tools, only 13% have made it a true strategic priority with dedicated budgets and scaling plans.
Workforce transformation is underway with mixed impacts: Half of businesses report moderate role changes, with employees spending more time on creative work (42%) and less on administrative tasks (36%), though concerns about job losses have increased from 29% to 37% since 2023.
It’s only just the beginning for AI adoption: Growth-stage businesses (63%) and those with 100-250 employees (61%) show highest readiness for AI-driven industry shifts, and middle market businesses are beginning to see operational advantages through bold AI implementation.
Read on to learn how middle market leaders are successfully navigating the AI transformation and the strategic actions you can take to position your business for the next generation of growth.
Middle market’s resilience underpinning steady confidence
The middle market’s measured approach undimmed by challenges
Survey after survey shows Australia’s middle market leaders’ unshakable confidence in the face of increasingly challenging conditions – geopolitical tensions, increasing costs, and the unpredictability of technological disruption. Middle market leaders aren’t wearing rose-tinted glasses. This battlehardened cohort sees challenges as manageable factors rather than insurmountable obstacles. The one deviation we have seen in this report is declining confidence from mature businesses, dropping from 8.10 earlier this year to 7.67, slightly lower than the 8.00 average. It may be that they consider their size and legacy as negatives in the face of the incoming technology challenges.
Tech is making the middle market confidence stronger
Certainly, technology is very much top of mind for our survey respondents. Technology advancement is now cited by 43% of leaders as a positive driver of confidence, up from 12% since our last survey, and has been one of the top five positive or negative factors since early 2024.
Tech is a major driver of confidence, up 12% from July 2025
With AI, our business is thriving. We’re investing in customer service, production and automation.
Survey respondent with an annual turnover of $10-$50 million in a growth stage with high business confidence
labour costs are having less of an impact on business, decreasing from 21% in our July report
Labour market challenges in the rear view
Go back 18 months, and a squeezed labour market loomed large for our middle market leaders. That pressure has eased since mid-2024 (42% to 16%), and labour shortages no longer make an appearance in the top five factors most impacting business confidence. A deep dive into AI suggests that the technology may have contributed to this shift.
23% of businesses say AI has helped them address labour shortages by streamlining work 22% of businesses are moving junior staff into highervalue roles faster
AI: From novelty to normality
Just two and a half years after OpenAI’s release of its gamechanging ChatGPT 4, awareness of generative AI and large learning models is almost universal, with 93% of middle market leaders familiar with it. Nearly half (46%) now say they “know a lot” about it compared to just 21% two years ago. AI represents an incredibly powerful tool with enormous potential to transform how middle market businesses work. But like any tool, it has limitations and risks that need to be understood, along with appropriate safeguards to manage them.
Familiar with AI: 2023 – 83% 2025 – 93%
Most of our surveyed leaders and their teams are experimenting with tools and platforms, and for many, AI has become part of daily operations. 72% of businesses are actively engaging with some form of AI, most commonly through text-based assistants (60%), Microsoft Copilot (48%) and customer support chatbots (38%).
AI-powered tools or platforms currently used in businesses
72%
of businesses are actively engaging with AI
60% 48% 38% 35%
ChatGPT, Gemini, Claude, Grok, Perplexity or other text-based assistants
Microsoft Copilot (Word, Excel, Outlook etc.)
Customer support chatbots or voice assistants
CRM or marketing platforms with AI features (e.g. Salesforce Einstein, HubSpot AI)
While 33% have implemented AI to improve or replace specific processes, and 26% are using AI-enabled tools, just 13% have made it a true strategic priority with budgets and plans to scale.
Businesses current engagement with AI
We’ve implemented AI to improve or replace specific processes/functions
We’re actively using tools that include AI, but it’s not a strategic focus for us
We are experimenting in small or isolated ways
We’ve made AI a strategic priority and have budget or plans in place to scale it
We’re not currently using it, but are exploring or interested
We’re not using it and don’t plan to
While businesses are cautious, they’re positive about the potential of AI. Many expect to expand faster with AI-enabled efficiencies (42%) and offer new (38%) or lower cost (27%) services. Our middle market leaders aren’t blind to the costs, however, with 38% expecting to increase investment in proprietary data, technology or IP.
How do businesses expect to evolve?
Expanding faster due to AI-enabled efficiencies
Introducing new AI-powered service offerings or products Increasing investment in data, tech or IP
Before investing in AI, it’s essential to define exactly the business outcomes you expect to see from any implementation. Without this clarity, your use of AI could add complexity rather than supporting a broader business strategy.
Relatively higher in NSW (55%) and businesses with more than 250 employees (54%)
Relatively higher for businesses with high confidence (51%), businesses who are in their growth stage (47%) and businesses with more than 250 employees (50%)
Key action
Be clear on your required business outcomes
With a defined goal set, you’ll be better equipped to assess the various AI tools beyond ChatGPT, set realistic expectations, and ensure AI is solving real business problems to deliver measurable value.
Jyotika Rangel, Partner, Pitcher Partners Sydney
Top AI use-cases for Australian middle market businesses
Admin tasks (notetaking, summarising) 67%
Customer service and sales (chatbots, ticket triage, sales enablement) 63%
Marketing and content (ideation, copywriting, campaign optimisation) 63%
Operational improvements (automation, timesheets) 62%
Cybersecurity and risk management (threat detection, anomaly monitoring) 56%
Finance and reporting (forecasting, reconciliation) 52%
Business size and stage also influence where AI is most useful: 66%
Growth stage: cybersecurity and risk management (vs 52% average) 65%
Smaller organisations: finance and reporting (vs 47% average) 65%
Larger organisations: HR and recruitment (vs 47% average)
Playing catch-up
More than half of businesses are ready to adopt AI, but the foundations they need may not yet be in place: only 12% of businesses are feeling fully prepared to scale adoption and 39% are only fairly ready. Almost 35% report being neutral or partially ready, but a further 15% are somewhat unprepared or not at all ready.
How ready are businesses for AI adoption?
Main challenges to AI adoption
65% 64% 52% 46% 45%
Data privacy or security risks
Lack of skills or training
Lack of trust in output and quality
Barriers to adopting AI include technical and compliance issues (65%), particularly around data privacy, security risks and legal uncertainty. Close behind are capability barriers (64%), such as skill and training gaps or simply not knowing where to begin. Respondents also cited a lack of trust in AI outputs (52%), financial constraints (46%) and cultural challenges (45%). Business leaders should never assume AI outputs are completely accurate or trustworthy without verification, reinforced by recent AI-related government report errors dominating the headlines A healthy level of scepticism is valuable: question what AI produces, ask for evidence, and examine the assumptions behind its answers.
Cost of tools or implementation
Staff resistance or fear of job loss
Middle market businesses are grappling with not only how to adopt AI but whether it can be trusted, afforded and embedded to deliver genuine value
The value of AI technology is – and always will be – dependent on the quality of data that engines have access to and the capability of existing infrastructure. That means you need to first get the essentials right to uplift your tech maturity.
People hold the key to success
The focus on the human element is critical. A recent study from MIT interviewed 150 executives, surveyed 350 employees, and reviewed 300 AI projects. It found that 95% of pilot projects failed to deliver measurable financial gains. The key issue in the MIT report was that most organisations seeking to implement and integrate AI into their business are currently unable to get a return on their investment. The AI technology is not yet developed to be capable of learning from feedback and mistakes, cannot retain content across sessions, which is limiting the ability to roll out solutions in an effective and efficient way. Most adoption currently is via Large Language Models (e.g. ChatGPT) which assists in research, generating content, refining content, and answering questions such as with customer chatbots.
The bigger impact for businesses will be when their legacy systems and software solutions are redesigned and built with AI integrated within them. AI will be truly embedded in their business processes and then perhaps we will see the benefits of insights, automation, and decision making enhancements that will truly drive business performance.
Spending money on software licences alone won’t deliver results. Make sure you also have a budget set aside to onboard and support your people through the change. This may also require broader training – from external experts alongside internal champions – to close internal skills gaps.
Key action
Build your tech maturity
Look to implement reliable storage, clear governance and systems that ensure information is accurate and accessible. Invest in business intelligence capability with reporting, analytics and warehousing tools embedded so decision-making is already data-driven.
Key action
Invest in people and policy, not just software
Establish clear guidelines on appropriate use, and put in place secure, locked-down environments for handling sensitive data. The goal is to prevent incorrect or careless use from exposing the organisation to compliance, privacy or reputational harm.
Jyotika Rangel, Partner, Pitcher Partners Sydney
Sudha Viswanathan, Partner, Pitcher Partners Melbourne
More time for creativity, collaboration and client service
The current landscape is saturated with bold claims that often sets unrealistic expectations for the value delivered by AI. In reality, AI won't do all the work for your business, but it can be an invaluable time-saving tool that frees you and your team to focus on higher-value tasks – the work that requires judgment, creativity, and human connection.
Middle market leaders are already seeing that shift in their businesses, despite few having fully operationalised AI technology. Half say employees are experiencing moderate changes to their roles, and a further 16% are adapting to significant changes.
AI impact on the nature of roles across businesses
The AI decision-making system, through reinforcement learning to simulate future scenarios, can accurately predict production capacity and avoid losses of tens of millions of dollars.
Survey respondent
Workforce transformation is underway, though concern about job losses has increased
The changes are positive overall: teams are spending more time on creative, strategic work (42%) and less time on lowvalue admin (36%). Over a third of leaders report improved workflow efficiency and visibility and that team members have a greater ability to add value within roles. Some 40% report faster turnaround on deliverables – those clear efficiency gains could also help businesses respond more quickly to customer and market shifts.
The productivity, growth and culture benefits of these shifts could be significant. More time spent on higher value tasks means businesses can move faster on innovation, improve client engagement and invest more in growth initiatives. Leaders say work is becoming more self-directed (33%), and cross-functional collaboration is increasing (32%), breaking down silos and creating stronger, more connected teams. When teams are in sync, they deliver stronger business outcomes, solve problems faster and deliver more consistent customer experiences.
Impact on ways of working due to AI
The most helpful [use for AI] is the ability to do a lot of the difficult tasks in the background so the people can focus on what they need to do and the client relationships.
Survey respondent
42% 40% 36% 33% 32%
More time is being freed up for creative or strategic work
Faster turnaround times on deliverables
Teams are spending less time on lowvalue admin
Work is becoming more self-directed or autonomous
More cross-functional collaboration using shared tools
Some of the most helpful ways AI is being used are generally to make businesses more efficient and valuable. Businesses have a more secure future if AI is incorporated.
Survey respondent
The trade-off
There is, however, a potential trade-off to be considered. Some 23% of respondents have seen some roles being reduced altogether, which may reduce costs in the short term but risks eroding staff morale. Data from our previous Business Radar survey on AI in 2023 showed that concerns over job losses was at 29%; that has now markedly increased to 37% in 2025. They’re right to be concerned – a report from the Productivity Commission warns that the value of AI to the Australian economy will come with a painful transition period for workers whose roles will be made redundant.
Getting value from AI requires a workforce that’s enthusiastic about its possibilities and the challenge. However, your teams are likely to be anxious about the future, their job security and if they’ll have the skills to keep up.
Key action
Support your people
Start by acknowledging the concerns of your people openly, show them the real opportunities and invest in retraining so staff see a future for themselves in an AI-enabled business.
Gavin Debono, Partner, Pitcher Partners Melbourne
It’s just the beginning
As more businesses harness the breathtaking power of AI, the risk of being left behind increases. While 51% of middle market businesses say they’re ready for AI-driven industry shifts (see page 10), that confidence is much higher among:
• Growth-stage businesses (61%), perhaps because they see themselves as leading the disruption
• Organisations with 100–250 employees (63%), perhaps in the sweet spot of being well-resourced without the deadweight of legacy processes or software
By contrast, businesses in the seed-stage (25%) and those with lower confidence (35%) report much lower preparedness. This AI journey has only just started. Developers and experts in the AI space are continuing to develop new capabilities of AI and new tools and applications to benefit from these new capabilities.
Middle market businesses need to actively be aware of the developments that will help or impact their business model, or their industry, and take active steps to implement these capabilities into their organisation or risk being left behind. Change is going to be the only constant while rapid development and improvement in AI technology continues.
How
ready are businesses for AI adoption – by segments
The main effort that our AI development team is heading towards is streamlining manual reporting and saving time in areas that give little returns for a lot of input.
Survey
respondent
63% 67% 63% 61%
Actively engage with AI
High confidence in future success of business
Businesses with 100–250 employees
Businesses in the growth stage
Among middle market businesses, those in a growth stage have high confidence in their future and those actively using AI are best positioned to scale adoption
Clear leadership support is relatively higher in businesses that are in their growth phase (76%) and those who have high business confidence (75%)
When it comes to what drives this readiness, 64% cite clear leadership support as the single most important factor, closely followed by: policies or guidelines for AI use, client or customer expectations for AI-driven services, trusted vendors or advisors, and strong systems and data foundations.
Main factors influencing business’s current level of readiness for AI
64% 59% 59%
Clear leadership support for AI
We are already seeing the emergence of middle market businesses in the growth stage incorporating AI at an operational level. Their size and growth stage allow them to make bolder calls, testing and learning on a smaller scale. Established players can’t take too long to respond.
Gavin Debono, Partner, Pitcher Partners Melbourne
As AI becomes embedded in daily operations, businesses, along with their competitors and clients or customers, will all have access to the same tools. That levelled playing field means organisations will need to better understand the value they offer beyond outputs or time spent. While AI technology isn’t perfect and is continuing to develop and improve, its capabilities are advancing at an extraordinary pace. That’s why it’s important to actively be aware of what is out there that could be useful for your organisation and to take the step of trialling and implementing these tools now. It’s important to ensure you and your team are positioned to take full advantage as the technology continues to evolve.
Have policies or guidelines around AI use
Clients or customers are expecting AI-driven services
Key action
Double down on the value you offer
Think laterally and creatively about why clients choose to work with you or customers choose your product. In many cases, it will be connected to human skills that build interpersonal relationships and drive creativity, curiosity, collaboration or ethics. By articulating and investing in your distinct value, AI can become a tool that amplifies your strengths rather than erodes them.
Insights for business Actions to take
As AI adoption becomes more widespread, doing nothing isn’t an option, but acting without preparation could be equally as risky. Moving at pace with deliberate planning will ensure AI becomes an enabler of strategy, not a source of disruption. Here’s where to focus your efforts:
Key actions to take:
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Build the base before adding AI
Build strong data systems, governance and business intelligence capability before layering AI on top. Check that your infrastructure is ready for the increased loading.
Start with the outcomes in mind
Decide what you want AI to achieve so it drives strategy, not side projects.
Define the human value only you provide
Distinguish your business and protect your revenue through the human skills and insights AI can’t replicate.
Bring your people with you
Address employee concerns openly and invest in upskilling so they can thrive alongside AI.
5 Consider safeguards and reduce exposure
Put policies, safeguards and education in place to prevent careless or unsafe use of the AI tools.
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Educate, educate, educate
Look for ways to provide training in multiple formats and forums, continue to share knowledge on types of tasks where AI adds value.
Research and trial
Get access to the latest developments, whether that is in-house expertise or outside connections to identify relevant technologies and applications for your business. Then try them out.
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Gavin Debono
Partner – Melbourne
p +61 3 8610 5331
e gavin.debono@pitcher.com.au
Jyotika Rangel
Partner – Sydney
p +61 2 8236 7811
e jyotika.rangel@pitcher.com.au
Chris Hanna
Principal – Adelaide
p +61 8 8179 2800
e chris.hanna@pitcher-sa.com.au
Kylie Lamprecht
Partner – Brisbane
p +61 7 3222 8437
e klamprecht@pitcherpartners.com.au
Peter Lawrence
Partner – Newcastle
p +61 2 4923 4000
e peter.lawrence@pitchernewcastle.com.au
Robert Prince
Executive Director – Perth
p +61 8 9322 2022
e princer@pitcher-wa.com.au
Sudha Viswanathan
Partner – Melbourne
p +61 3 8610 5235
e sudha.viswanathan@pitcher.com.au