Singapore faces AI adoption hurdles with cost and talent gaps: report

It found that 68% of businesses are still in the early phases of AI adoption.

Singapore’s push to advance artificial intelligence (AI) adoption is facing growing challenges, according to a new survey commissioned by global HR platform Deel.

Despite a strong interest in AI’s potential to boost efficiency and productivity, the study highlighted that economic uncertainty, talent shortages, and limited engagement with government policies are slowing adoption across the business landscape.

The survey, conducted by Milieu Insight in April 2025, polled 350 Singapore-based business leaders from both SMEs and large enterprises.

It found that 68% of businesses are still in the early phases of AI adoption, whilst only a minority have reached intermediate or advanced levels.

Economic headwinds were cited as a major barrier. More than 80% of companies reported being negatively impacted by global tariffs, and over half said operational costs have increased as a result.

These pressures have led to wage freezes (60%), hiring slowdowns (48%), and retrenchments (43%). Businesses at more advanced stages of AI adoption were particularly affected, with 86% reporting cost-related pressures.

Despite these challenges, many companies view AI as a tool to adapt to the current climate. Amongst businesses that have implemented AI, 71% reported increased efficiency, 61% noted operational optimisation, and 50% saw cost savings.

In response to global disruptions, 31% of companies have accelerated their AI or automation efforts.

The report also pointed to a persistent shortage of AI talent as a key obstacle. Nearly half of the respondents (47%) said the local talent pool is insufficient.

High salary expectations, limited career development opportunities, and skills mismatches were among the top recruitment hurdles. Whilst 62% of businesses expressed openness to hiring international talent, only 20% have dedicated budgets for workforce reskilling.

Government policy was another area where gaps were identified. Whilst 92% of respondents said public support is essential for AI adoption, particularly financial aid, upskilling initiatives, and advisory support, only 5% reported actively engaging with the government’s National AI Strategy.

Additionally, 95% said they were unfamiliar or only mildly familiar with Singapore’s AI governance framework.

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