Generative AI is quite a new technology and as such the effects of this technology on the world are still being discovered. One such development is Shadow AI, a term used in a new Microsoft-commissioned report to describe the unauthorized use of AI by employees which creates a risk to the privacy and security of organizations.
The report was conducted by Censuswide in October 2025, surveying 2,003 UK employees. It found that 71% of UK employees have used unapproved consumer AI tools and work with 51% continuing to use these unapproved tools on a weekly basis. Around 49% said they used these tools for communications, 40% used them to draft materials, and 22% used them for finance-related tasks.
While employees are clandestinely using AI, it’s also saving UK workers an estimated 7.75 hours a week on admin tasks, equating to 12.1 billion hours annually across the UK economy, worth around £208 billion.
AI use is most common in IT and Telecoms, Sales, Media and Marketing, Architecture and Engineering, and Finance and Insurance. Despite the time gains, only 32% of respondents were concerned about the privacy of the company or customer data inputted, however, a smaller proportion of 29% were concerned about the security of their organization’s IT systems due to AI use.
According to the report, 41% of employees used these tools due to ease and familiarity, and 28% said they use unauthorized tools because their company doesn’t provide an approved option. The top reasons for using AI to save time are improving work/life balance (37%), developing new skills (31%), and focusing on more meaningful work (28%).
The report also found that attitudes toward AI are becoming more positive, with 57% now expressing optimism, excitement, or confidence - this is up from 34% in January 2025. Employees are also clearer about why their companies are using AI (43%, up from 24%), and are more likely to see it as essential to success (39%, up from 18%).
Darren Hardman, CEO, Microsoft UK & Ireland, said:
“UK workers are embracing AI like never before, unlocking new levels of productivity and creativity. But enthusiasm alone isn’t enough. 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.”
While employees may be feeling better about AI than previously, they still need to be careful that they don’t make themselves inadvertently irrelevant and get replaced by AI, or a single person using AI to fill the roles previously that needed multiple employees. Regarding AI-induced layoffs, the current thinking is that AI will cause job losses, but will also lead to new roles that those displaced could move into.