Redundancies are rising, legal risks are shifting and UK employers are racing to automate before the new Employment Rights Act lands on 1 January. That mix is unsettling for workers, but it creates a very real capital allocation question for you. This article walks through 3 stocks exposed to this jobs and automation story, all drawn from an AI and automation screener, to help you assess where this new pressure might create opportunity or add risk.
The three stocks below are a small sample, and the full screen surfaced 15 more UK automation and AI providers with equally compelling narratives that are not covered here. If you want to move faster than the policy changes, head straight to the Automation and AI Providers Serving UK Enterprises screener to identify, compare and analyze the highest conviction candidates for your watchlist.
RWS Holdings (AIM:RWS)
Overview:RWS Holdings provides AI driven language, content and intellectual property services that help enterprises automate multilingual workflows and support global collaboration.
Market Cap:£527 million
RWS Holdings fits this automation and AI screen because its tools sit directly in the content workflows that employers are trying to digitise as labour rules tighten.
"The acceleration of the company's technology-first strategy, with increased use of AI and automation across business units, should increase operating efficiencies, shift more revenue toward higher-margin SaaS and technology licensing, and enable recurring earnings growth as the content and language technology market evolves."
What really matters now is how one unresolved pressure on pricing power interacts with that push toward higher margin, software-led revenues.
If that pricing pressure is the missing piece for you, the full narrative for RWS Holdings shows how AI adoption, contract mix and client behavior could be decoupling.
Kainos Group (LSE:KNOS)
Overview:Kainos Group helps organisations digitise operations through IT consulting and cloud software, automating HR, finance and public service workflows.
Operations:Kainos generates £241.7 million from Digital Services, £107.6 million from Workday Services and £81.7 million from Workday Products.
Market Cap:£1.49b
Kainos Group matters in this automation focused screen because its Workday and digital services projects directly replace manual processes with cloud based, software driven workflows.
"Deepening product collaboration with Workday, including exclusive resale of Pay Transparency and participation in the Clear Skies initiative, is described as expanding addressable markets and supporting sustained double digit ARR growth, which in turn is expected to drive higher software led revenue and operating leverage."
What really counts now is how one shift in client demand for automated compliance and HR tooling feeds through into Kainos Group's margins.
If that margin story is what you are testing, the full narrative for Kainos Group shows how Kainos Group's automation push, pricing and risk mix could be pulling apart.
Made Tech Group (AIM:MTEC)
Overview:Made Tech Group delivers digital, data and AI driven services that help UK public sector bodies automate workflows and reduce manual processing.
Operations:The business reports £58.88 million in revenue from Computer Graphics related services that support its wider public sector technology work.
Market Cap:£80 million
Made Tech Group is directly linked to the Employment Rights Act theme, supplying automation heavy digital services to UK government departments. Earnings growth, improving margins and a P/E below many IT peers may influence its appeal, depending on how one unseen pressure on public sector demand and project pricing develops.
That hidden public sector pressure is exactly what the analysis report for Made Tech Group unpacks so you can judge whether Made Tech Group's current valuation is masking something bigger.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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