Economic pressure, talent shortages slow Singapore’s AI adoption

Over 80% of companies report being hit by global tariffs.

Singapore’s ambition to lead in artificial intelligence (AI) is facing significant roadblocks due to rising costs and a lack of skilled talent,
according to a new survey by Deel.

The research, based on responses from 350 business leaders across SMEs and large firms, revealed that more than 80% of companies report being hit by global tariffs, and over half face higher operating costs.

These pressures have led to wage freezes (60%), hiring cuts (48%), and layoffs (43%). Even companies advanced in AI adoption feel wage pressures, showing no sector is immune, the report noted.

Despite these challenges, 71% of businesses using AI report improved productivity, and 31% have sped up AI or automation efforts to cope with economic disruption.

Talent shortages remain the biggest hurdle. Nearly half said the local AI talent pool is insufficient, with high salary demands and skill mismatches.

SMEs also lag behind larger enterprises in AI progress, and 60% of non-adopters cite talent gaps as a major concern. Whilst 62% are open to hiring overseas talent, only 20% invest in reskilling local workers.

Government support is widely seen as critical, but only 5% of firms actively engage with Singapore’s National AI Strategy. Most want more financial help, talent development, and clearer regulations, yet awareness of existing frameworks is low.