Rise in ‘Shadow AI’ tools raising security concerns for UK organisations

New Microsoft research reveals that 71% of UK employees have used unapproved consumer AI tools at work, and 51% continue to do so every week.

And the use of this ‘Shadow AI’, as it’s known, presents a growing risk to the privacy and security of UK organisations, the report says.

Generative AI tools and chatbot assistants are now mainstream in the UK workforce, with employees saving around 12 billion hours a year across the economy, equivalent to more than £207 billion worth of time, the research finds.

But a worryingly low proportion of respondents expressed an understanding or concern over the risks of using unapproved external AI assistants.

Just a third (32%) said they were concerned about the privacy of company or customer data inputted into consumer AI tools, and only 29% were concerned about the security of their organisation’s IT systems.

Employees report that they turn to Shadow AI tools for their ease and familiarity. Four-in-ten (41%) say it’s what they’re used to in their personal life, while 28% report that their company doesn’t provide a work-approved option.

“UK workers are embracing AI like never before, unlocking new levels of productivity and creativity. But enthusiasm alone isn’t enough,” says Darren Hardman, CEO, Microsoft UK & Ireland.

“Businesses must ensure the AI tools in use are built for the workplace, not just the living room.

“The message is clear: only enterprise-grade AI delivers the functionality that employees want, wrapped in the privacy and security every organisation demands.”

The use of Shadow AI poses security risks because sensitive company or customer data may not be protected effectively, leaving organisations vulnerable to data leaks, regulatory non-compliance, and increased risk of cyber-attack.

AI assistants go mainstream

Workplace users of generative AI assistants report saving 7.75 hours a week on average across various admin tasks.

Dr Chris Brauer, Director of Innovation at Goldsmiths, University of London, estimates that this equates to 12.1 billion hours saved across the UK economy each year – worth around £208 billion of workers’ time.

AI use is most common among employees in IT & Telecoms, Sales, Media & Marketing, Architecture & Engineering, and Finance & Insurance sectors.

Rising optimism

Attitudes towards AI are becoming more positive across the UK workforce, the report finds, with more than half (57%) of employees now describing their feelings as optimistic, excited or confident – up from 34% in January.

Confidence and familiarity are also increasing. In January 2025, 44% of employees agreed they “didn’t know where to start with AI,” but by October 2025 that figure has fallen to 36%.

Employees are now clearer on why their companies are using AI (increasing from 24% in January to 43% today) and are more likely to say that AI is an essential part of their organisation’s success strategy (more than doubling to 39% from 18% at the start of the year).

This mirrors findings from Microsoft’s global Work Trend Index, which found that 82% of business leaders worldwide view 2025 as a turning point for AI strategy, and nearly half (46%) are already using AI agents to automate workflows.

The report also shows that employees in “Frontier Firms” – those furthest ahead in AI adoption – are almost twice as likely to say their organisation is thriving.