Diversity Think Tank: Weathering the Storm

The perfect storm brewing in tech

We are indeed living in changed times. The UK's tech sector finds itself operating in what business theorists call a VUCA world - one characterised by Volatility, Uncertainty, Complexity, and Ambiguity. Some argue we've moved even beyond VUCA into a BANI environment: Brittle, Anxious, Non-linear, and Incomprehensible. These frameworks help explain why the tech sector feels particularly unstable right now.

The perfect storm includes constant restructuring, rapid adoption of artificial intelligence (AI), changing integral work frameworks, economic pressures from inflation and rising interest rates, and mounting societal expectations. In this BANI world, systems that appear robust (like established diversity programmes) can prove surprisingly brittle when pressure mounts. The anxiety this creates drives organisations toward what feels safe and familiar, while the non-linear nature of change means small budget cuts can have disproportionately large impacts on inclusion efforts.

Only 21% of positions in UK tech are held by women, and only 9% of technologists come from a lower socioeconomic background, highlighting how much work remains to be done. Yet, as uncertainty deepens and the environment becomes more incomprehensible, our collective resolve appears to be weakening.

The economic backdrop is unpredictable; after strong gross domestic product (GDP) growth in the first quarter of 2025, the UK economy looked set to grow more slowly over the rest of the year and higher employer National Insurance contributions added financial pressure on tech businesses. In this environment, DEI initiatives (often viewed as long-term investments rather than immediate necessities) become easy targets for cost-cutting.

This retrenchment isn't unique to the UK. Much noise has been made across the Atlantic, and major corporations are continuing to scale back diversity programmes amid political pressure. But even before recent political developments, companies were already dialling back on their diversity policies due to cultural backlash, with some viewing DE&I practices as controversial rather than beneficial.

The historical pattern we cannot ignore

There's a troubling historical precedent that should give us pause. Research from Harvard examining academic hiring during the 2007-2009 Great Recession found that financial uncertainty activates stereotypes and leads to more conservative hiring practices, disproportionately affecting Black, Hispanic, and Asian American academics. The pattern is clear: when economic pressure mounts, marginalised groups bear the brunt of the impact, experiencing higher unemployment rates and slower recovery.

This isn't merely about individual bias - it's about systemic responses to uncertainty. When everyone becomes "just a little bit more conservative", hiring committees tend to rely on existing networks, which historically skew white and male, while overlooking more diverse candidates who might be seen as "riskier" choices.

These patterns suggest that our current retreat from DEI isn't just unfortunate timing. It's a predictable response that risks amplifying existing inequalities.

Scaling back DEI isn't just morally questionable; it's economically shortsighted. With the UK's digital skills gap costing £63 billion annually, we're narrowing our talent pipeline during a critical shortage.

As AI reshapes work, we need diverse human thinking, not homogenisation alongside machines.

Even encouraging entrepreneurship hits barriers. With 72% of VCs privately educated and only 2% of funding reaching female founders, established networks systematically exclude marginalised communities.

Why this moment matters

What makes this period particularly concerning is the intersection of multiple pressures. AI adoption is fundamentally reshaping how we work (in case you hadn’t heard), yet the teams designing and implementing these technologies lack diversity. As algorithms increasingly influence hiring, promotion, and business decisions, the lack of varied perspectives in their development will entrench existing biases at an unprecedented scale. 

The restructuring tornado sweeping through tech (with constant layoffs, mergers, and pivots) creates an environment where survival mode thinking dominates. In such contexts, investments in long-term cultural change feel like luxuries. Yet this is precisely when we need diverse thinking most. Innovation emerges when points of view collide, not from thinking in lockstep.

Charting a different course – advice for business leaders

The question isn't whether we can afford to maintain DEI initiatives during uncertain times - it's whether we can afford not to.

Stop treating DEI as separate from business strategy. As we navigate the path ahead, workplace wellbeing isn't just a nice-to-have—it's becoming a critical competitive advantage. In an era where human and AI talent work side by side, each leveraging their unique strengths, the traditional sources of business differentiation are rapidly evolving.

AI and automation are raising the floor on average performance across industries. When tools can execute routine tasks with increasing sophistication, the margin for competitive advantage narrows significantly. In this landscape, what truly sets organisations apart isn't their technology stack- it's their teams' strength, creativity, and collaborative power.

Integrate diversity metrics into core business reporting. Data and the insight it provides will be more important than ever to ensure the tools and approaches we take are fit for the future. Now, it is time to get your data and accountability lined up. Robust DEI actions make a difference not just to historically excluded groups but to organisations as a whole, and companies that scale back will likely miss out.

Invest in inclusive leadership development. Rather than cutting diversity training budgets, focus on building managers' capabilities to lead diverse teams effectively. Really focus on emotional intelligence and cultural intelligence.

Learning from those who got it right

Some organisations are defying the trend. Companies that view diversity as a competitive advantage rather than a compliance exercise continue to invest, recognising that downturns create opportunities to attract top talent from retrenching competitors.

These leaders understand that businesses with diverse, inclusive workforces consistently show stronger profitability, making continued investment in DEI a smart business bet rather than a luxury expense.

We stand at a crossroads. We can allow economic uncertainty to justify abandoning progress, or political noise to let us to forget connection and keep following the familiar pattern, where marginalised communities bear the cost of others' fears. Or, we can recognise this moment as a test of our values and commitment to building a truly inclusive tech sector.

In a sector that prides itself on innovation and disruption, we can disrupt that tired narrative of abandoning diversity when times get tough.

The perfect storm may be upon us, but storms also create opportunities for those brave enough to navigate them differently. The question is: will we be among them, or will we become another cautionary tale of what happens when fear trumps progress?

The future of UK tech depends not just on our technology, but our humanity. Let's ensure we don't lose sight of either.