Middle Market Firms Increasing AI and Training Investments Amidst Hiring Challenges

The landscape of middle market businesses is undergoing significant changes as reports indicate an overwhelming majority are preparing for ongoing hiring challenges. According to a recent survey conducted by RSM US LLP in collaboration with the U.S. Chamber of Commerce, a notable 52% of middle market executives anticipate substantial staffing needs over the coming year, even as the U.S. labor market appears to cool.

Insights from the Survey

The survey, which was conducted in late 2025, highlighted that companies with annual revenues ranging from $50 million to $1 billion are particularly feeling the pressure, with 62% indicating significant hiring anticipations. In stark contrast, just 38% of smaller firms with revenues between $10 million and $50 million share this urgency. Surprisingly, 10% of participants do not foresee any hiring in the next year and 4% are considering workforce reductions.

Economist Tuan Nguyen from RSM expressed that while the labor market is experiencing a slowdown similar to no before, the effects are not universal, showcasing a K-shaped recovery. Large firms are managing well, while smaller businesses are grappling with increased difficulties.

Key Workforce Challenges

Among those expecting hiring challenges, a staggering 84% believe filling open positions will be at least somewhat difficult, a notable surge from 66% just a year prior. Executives pointed to a scarcity of qualified workers, soaring labor costs, and geographical competition as the main obstacles.

Chris Mueller, managing director of RSM's human capital management practice, stated that as hiring hurdles persist, companies are prioritizing managing their workforce more effectively. Innovative tools are becoming increasingly vital in this pursuit.

The current shift in workplace policies reveals that 31% of firms are now enforcing a return to office mandates, while another 25% are reflective about this move, but 44% presently avoid any such requirement.

The Shift Towards Outsourcing

Facing manpower shortages, many middle market businesses are reconsidering outsourcing strategies for areas such as IT functions, customer services, and payroll. Ross Krusell from RSM indicated there is increasing interest in co-sourced or fully outsourced solutions, with clients across various sectors seeking support in HR, payroll, financial accounting, and managed IT services.

The Rise of Artificial Intelligence

In the realm of technology, the same survey detailed an increase in investments with 74% of executives intending to elevate spending on AI over the next two years. Cybersecurity (71%), cloud services (63%), communications (62%), and human resource management systems (44%) also marked significant areas of investment. Among those planning AI expenditures, an impressive 85% cited the enhancement of employee efficiency and productivity as a primary motivator.

Addressing the skill gap, 62% of firms are planning or considering new training programs for current employees, while 61% are focusing on AI investments, and 59% are prepping for AI implementations. As Stephanie Ferguson Melhorn from the U.S. Chamber of Commerce aptly put it, workforce development efforts must synchronize with innovations like AI and automation to redefine the modern workplace.

Conclusion

The survey results paint a vivid picture of a middle market striving to adapt through technological investments and necessary training as they face persistent hiring difficulties. This reflects a significant shift in corporate strategy as firms embrace AI and workforce development to stay competitive and efficient in an evolving market landscape. The future will depend on how well these businesses can align their workforce capabilities with emerging technologies to thrive in the coming years.