Singapore’s pursuit of artificial intelligence (AI) leadership faces significant hurdles as a new survey by Deel, an all-in-one payroll and HR platform, highlights the impact of global tariffs and talent shortages on the city-state’s digital transformation.
Conducted by Milieu Insight in April 2025, the survey gathered insights from 350 business leaders across Singapore, revealing that 81% of companies are negatively affected by global tariffs, with over half experiencing increased operational costs.
These economic challenges are prompting tough workforce decisions, including wage freezes (60%), reduced hiring (48%), and job cuts (43%). Despite these pressures, nearly a third of Singaporean businesses are accelerating their AI and automation efforts to navigate global disruptions. However, the survey indicates that 68% of businesses remain in the early stages of AI adoption, with enterprises progressing faster than small and medium-sized enterprises (SMEs).
Nick Catino, Global Head of Policy at Deel, noted, “Singapore’s businesses are being squeezed from both sides – by rising costs due to global economic uncertainty and the need to invest in innovation to stay ahead.” He emphasised that whilst AI can enhance productivity and cost savings, it is not a cure-all for macroeconomic challenges.
Talent scarcity further complicates AI ambitions, with 47% of respondents citing an insufficient local AI talent pool. High salary expectations and skills mismatches are major recruitment hurdles. To address this, 62% of businesses are open to hiring international talent, though only 20% have dedicated budgets for reskilling local workers.
Government support is deemed crucial by 92% of respondents, yet engagement with initiatives like Singapore’s National AI Strategy remains limited. As Singapore navigates economic headwinds, aligning policy, talent, and technology is essential to sustaining its digital leadership.
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