Singapore firms staggered by costs and training needs in digital push

SINGAPORE – Qbasis founder Huang Yaoquan has been juggling skyrocketing technology costs over the past year as his company, which specialises in tech services for physical security automation and system integration, tries to keep up with the latest tools.

As the tech his team of five uses becomes more complex, Mr Huang feels an urgent need to train his employees to keep pace with these changes.

“Costs all around have gone up: Servers, software and service subscriptions, development tools, compliance costs, tech salaries, freelance salaries... all across the board. And this is not only in the local context but globally,” he noted.

Yet, he has no choice but to bite the bullet. “Only by doing so can we provide a sound solution that is valuable in the current environment.”

Mr Huang’s situation reflects a broader trend among Singapore companies facing significant challenges in adopting new technology.

A survey of 529 companies over six weeks from May 23 initiated by the Singapore Business Federation (SBF) identified these challenges as major roadblocks to digitalisation. Small and medium-sized enterprises (SMEs), which account for 99 per cent of firms here, made up 82 per cent of the respondents.

The high cost of technology adoption, expensive licensing payments, constant upskilling needs for staff and not knowing what is suitable are hampering local businesses in their efforts to leverage tech, the survey found.

This is felt most acutely by retailers, real estate players, hoteliers, restaurateurs, logistics and transportation firms, compared with other businesses such as banks, wholesale trade or manufacturing firms.

Ms Eileen Tan, a partner at professional services firm RSM Stone Forest, said its clients have been “taken aback” by unexpectedly high technology costs, especially with the recent escalation of cyber risks.

Businesses have to accept information technology expenses as an inherent cost of doing business, she added.

Still, more companies, especially larger ones, recognise that they need to digitalise, said SBF chief executive Kok Ping Soon.

Tech adoption challenges also seem more acute in 2024, as all varieties of challenges in technology adoption are highlighted by a larger proportion of businesses compared with 2023, added Mr Kok, who was speaking at the release of the survey.

Firms are focused on improving operational processes such as back-office work like finance and human resources, as well as IT systems and hardware – mirroring the global trend.

Companies are reaping mainly productivity gains such as workforce time savings and cost reductions.

Mr Kok said companies seek funding for tailored consultations and projects, a one-stop resource point and seminars that will help them.

Companies rated the Government’s Productivity Solutions Grant, Enterprise Development Grant and Start Digital initiatives as the most useful.

Along with cyber security, artificial intelligence is ranked as a priority, with firms planning to implement it in operational process automation, cyber security and analytics in the coming 12 months.

The survey also showed that SMEs plan to spend 11 per cent of their annual budget on digitalisation in 2024 while large companies are earmarking 8 per cent.

The SBF could not provide a benchmark on the budget ratios but plans to study the complete survey results and put forth a set of recommendations for policymakers and businesses later in 2024.

Mr Wong Wai Meng, chairman of the Smart Technologies Action Committee, said: “More companies and industries are understanding the importance of digitalisation, the importance of emerging technologies, its impact on themselves, the market, the customers... and they are making that happen.”

The committee, newly established by the SBF and tech trade association SGTech, wants to sharpen the focus on what businesses need and consolidate resources to better help them.

Mr Huang, who is trying to expand his business in the region, said any overseas expansion boost will help.

“While existing government measures are generally effective, there is still room for improvement, especially in the speed at which businesses can access both solutions and the support schemes,” he added.