Singapore firms cite skills gap as key barrier to AI growth

Around 65% of AI adopters are still focused on basic use cases such as chatbots, analytics, or process automation.

A lack of qualified talent is now the biggest barrier to scaling AI in Singapore, according to a new release from Amazon Web Services (AWS).

In its latest report, 43% of businesses cited skills shortages as the main challenge to deeper AI integration, even as adoption rates continue to climb rapidly across sectors.

As of 2025, AI is now used by 48% of Singapore businesses—up from 40% the year before—representing around 170,000 companies. Some 27,000 firms adopted AI for the first time in the past year, averaging nearly three new adopters per hour.

Despite strong headline growth, most organisations remain at early stages of implementation. Around 65% of AI adopters are still focused on basic use cases such as chatbots, analytics, or process automation.

In the retail sector, this figure rises to 71%. Only 17% have reached what AWS defines as the “transformative” stage, where AI is central to product design or decision-making.

Startups are leading on adoption and innovation. AWS reported that 82% of startups now use AI, with 42% developing new AI-driven products. In contrast, only 62% of large enterprises have adopted AI, with 16% delivering AI products and 30% maintaining a formal AI roadmap.

Among AI adopters, 90% reported major productivity improvements and 82% saw revenue gains, averaging a 19% increase. Additionally, 89% expect cost savings from AI, with an average projected reduction of 17%.

Training remains a key bottleneck. Only 30% of businesses have rolled out AI-specific training programs, although around 40% of employees received some form of digital training in the past year. With AI literacy expected to be necessary for nearly half (48%) of future jobs, just 32% of companies say they feel ready.

To unlock the next phase of AI growth, AWS noted that businesses are prioritising the development of industry-specific skills, clearer regulatory frameworks, and faster adoption by the public sector.

Firms are 71% more likely to adopt AI when the government leads by example, whilst 75% of startups say public-sector adoption is critical to overall market confidence.

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