SINGAPORE’S digital economy shrank 2.3 per cent in nominal terms to account for S$113.2 billion of the nation’s gross domestic product in 2023, down from S$115.9 billion in 2022. (*See clarification note)
The Infocomm Media Development Authority (IMDA) said that the digital economy shrank in line with the nation’s nominal GDP, which fell 2 per cent year on year in 2023. In particular, the gross operating surplus declined 9.3 per cent year on year.
“Nonetheless, the share of return to digital capital out of total return to capital continued to increase as digitalisation deepened,” the agency said.
The digital economy accounted for 17.7 per cent of national GDP, which the IMDA said exceeds that of the financial services and insurance sector, and is on par with the manufacturing sector.
It added that the information and communications (I&C) sector accounted for around a third of the digital economy; non-I&C sectors made up the balance.
The figures were released in IMDA’s annual report on Tuesday (Oct 29).
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At a press briefing on Tuesday, IMDA said that while it does not have a target size for the digital economy as a proportion of national GDP, it expects the digital economy to remain a key contributor.
To ensure that the digital economy benefits more companies, IMDA said it continues to engage small and medium-sized enterprises (SMEs).
It said 82 per cent of SMEs have used at least one digital solution to enhance general business functions, up from 69 per cent in 2021. Accounting, document management and digital marketing were the most commonly digitised functions.
Since 2018, the agency’s Open Innovation Platform has been tapped 300 times to solve challenges faced by companies, it added. The virtual crowdsourcing platform connects and matches companies with more than 13,000 technology solution providers.
For instance, Yue Hwa Chinese Products tapped the platform to connect with enterprise resource planning solutions provider Synapsify, to manage staff-scheduling challenges with an artificial intelligence (AI)-driven rostering system.
AI adoption among SMEs
In the area of AI, IMDA said it was introducing generative AI to enterprises of different levels of digital maturity.
While 44 per cent of larger enterprises implemented some sort of AI technology in 2023, just 4.2 per cent of SMEs had done the same, it added.
IMDA found that while 93.5 per cent of the SMEs that adopted AI believed that it could improve their processes and productivity, 57.5 per cent of the SMEs that did not said they have not adopted the technology because they are small businesses.
The agency expects more than 300 SMEs to take part in the second iteration of the GenAI Sandbox, which will provide a curated list of generative AI-powered solutions.
The sandbox will provide access to 15 generative AI solutions across three categories – marketing and sales, customer engagement, and human resource operations.
Within these categories, the agency believes generative AI could make it more efficient for companies to design websites, or streamline recruiting workflows by screening candidates’ resumes.
At the press briefing, IMDA said companies can already purchase the enterprise versions of popular generative AI applications such as Microsoft Copilot and Google Gemini.
However, the agency’s focus will be more on specific enterprise applications, such as Hypotenuse AI, which works with predeveloped prompts to guide its output.
For example, bubble tea company PlayMade used the built-in image generator of Hypotenuse AI to prepare design briefs and manage the company’s social media workflows. This saved it time in the content creation process.
Those who apply for and get a place in the GenAI Sandbox will receive grants covering up to half the cost of trialling one of the solutions of their choice for three months.
Generative AI, including AI models created by companies such as Meta and OpenAI, are tools that, among other things, can perform a variety of tasks in response to natural language prompts.
The technology has been touted as a game changer in raising productivity, although companies have yet to adopt the technology at scale.
In February 2024, more than 150 SMEs, such as food and beverage chain The Soup Spoon, car-sharing company GetGo and investment platform Endowus, took part in the first generative AI sandbox.
About four in five companies continued to use the solutions after the three-month period.
Tech talent growth
IMDA noted that while demand for tech talent remains strong, hiring in the sector has taken a more cautious tack globally and in Singapore.
Tech jobs grew to 208,300 in 2023, up 3.4 per cent year on year, and accounted for more than 5 per cent of total employment, it said.
“These roles offer competitive salaries and career opportunities, with resident tech workers earning a median monthly salary of 1.5 times the overall resident workforce median monthly salary,” it added.
Furthermore, IMDA said it has put in place programmes to build a globally competitive local talent pool. It has, for example, curated about 200 AI-related courses and trained nearly 5,000 tech workers from 800 companies under the I&C Jobs Transformation Map.
The agency is also cautiously optimistic about the outlook for tech jobs in the near future.
At the press briefing, IMDA said that in the year to date, the number of retrenchments in tech jobs has been “a factor lower” than in 2023, when tech companies right-sized their workforces.
And even when such companies retrench members of their workforce, the roles that were cut tended to not be tech jobs.
IMDA added that it will continue to train and upskill locals, to prepare them for higher-value jobs in the tech ecosystem.
*Clarification note: An earlier version of this story said that the local digital economy had grown. IMDA has since clarified that it revised the size of the nation’s digital economy in 2022 upwards to S$115.9 billion, from S$106 billion.
