A third of companies here have invested significant resources in preparing for the future, although a notable number are still dragging their feet when it comes to transforming their businesses, according to a new survey.
The Singapore Business Federation (SBF), in its annual National Business Survey, asked 1,019 firms about their concerns and outlook for the coming year. About 84 per cent of respondents were small and medium-sized enterprises (SMEs), while the rest were large firms.
The data was collected from Oct 11 to Dec 13 last year.
The survey also found that business sentiment has picked up compared with the preceding year's poll. Thirty-six per cent of those polled in the latest survey said that they are satisfied with the current business climate in Singapore - up from 20 per cent a year earlier.
About 25 per cent have yet to take significant steps towards transforming their businesses.
And 60 per cent of these "slow starters" reported lower profitability in the past year, compared with the average of 44 per cent of all businesses surveyed.
They were also less likely to have implemented new technologies or explored digitalisation options.
At the other end of the spectrum, a third of respondents felt themselves to be at the forefront of innovation in their respective industries and have invested significant resources in preparing for the future.
These companies were three times more likely than the "slow starters" to implement new technologies and also three times more likely to have grown locally and overseas, the survey found.
They were also up to 10 times more likely than the "slow starters" to have implemented new digital solutions.
The findings suggest that firms considered to be "slow starters" are out of touch with technology and trends, said Mr David Black, managing director of research firm Blackbox Research, which collaborated with SBF on the survey.
"Slow starters appear to be far less responsive to some of the things happening in the business landscape...We also found that their self-reported performance (was poorer)," he noted.
The survey also showed that manpower and costs remain key concerns for companies, with 72 per cent of those polled saying that hiring people with the right skills and attitude is a challenge, followed by 58 per cent who said that they are grappling with high operating costs (excluding labour costs).
The Budget drew attention as well, with 60 per cent saying it should focus on supporting digital transformation, while 53 per cent want foreign labour quotas relaxed.
While companies have generally become more accepting of the tight manpower landscape, Singapore should remain open to talent - both local and foreign - in emerging growth sectors, said SBF chairman Teo Siong Seng.
Having the right talent is also essential to helping companies transform, he added.
SBF chief executive Ho Meng Kit agreed, noting that it will take time to build up a pool of local talent in fast-growing tech segments such as artificial intelligence.
"Companies are asking for more help for digitalisation and I don't think it's just about putting in more financial resources - it's more about getting access to the right kind of manpower," said Mr Ho.
"Some of this manpower will have to be foreign. We should do a detailed study on skills shortages, and where we fall short, there should be some flexibility in policy to bring in (foreign manpower) to train locals in a particular skill.
"Now that more companies are going on a transformation journey, I think the government should feed this momentum so that more companies (transform) quickly."