Digital Economy and AI Penetration
New data released by the Infocomm Media Development Authority (IMDA) on October 5 revealed significant expansion in Singapore’s digital sector. The nation’s digital economy grew to an estimated $144.1 billion in 2025, representing 19.3% of the country’s Gross Domestic Product (GDP). This marks a substantial increase from $136.5 billion and 18.8% in 2024.
A core component of this growth is the increasing integration of artificial intelligence (AI). According to the Singapore Digital Economy Report, AI was adopted by 23.5% of all enterprises in 2025, a notable jump from 14.7% in 2024. This rising adoption rate is observed across both small- and medium-sized enterprises (SMEs) and larger corporations. Specifically, AI usage among SMEs increased from 14.5% to 23.4%, while larger businesses saw adoption climb from 62.5% to 70.4% during the same period.
IMDA noted that the sustained expansion of the digital economy demonstrates that digital technologies are fundamentally reshaping operations across diverse industries and altering how workers perform their jobs.
Sector Growth and Workforce Trends
The digital economy value-add is calculated based on two elements: the economic contribution of the information and communications sector (including telecommunications, computing, and software services), and the value derived by non-tech industries through adopting digital solutions.
In 2025, non-tech industries were the largest contributor to the digital economy, expanding by 3.6% to $97 billion. Meanwhile, the tech sector saw a 6.1% expansion, reaching $47.1 billion.
The demand for technology talent is particularly strong outside the tech industry. Tech employment grew 3.8% year-on-year to 222,200 people in 2025, up from 214,000 in 2024. This growth was primarily driven by non-tech sectors, which saw a 5.3% increase in tech employment, compared to an 1.8% rise in the tech sector itself.
Wages in the tech sector remain high. In 2025, the median monthly salary for tech workers was $8,000, which is 60% higher than the overall median salary for all resident workers, which stood at $5,000. This contrasts with the 2024 figures, where median salaries were $7,950 for tech workers and $4,860 for all workers.
AI Adoption, Productivity, and Skills Gaps
Overall digitalization remained high in 2025, with 96.4% of all businesses having implemented at least one of six identified digital areas: cybersecurity, cloud technologies, e-payments, e-commerce, data analytics, and AI. This is an increase from 95.1% in 2024.
Businesses planning future AI use are also increasing. The proportion of companies that have not yet used AI but plan to implement it within the following year doubled, rising from 5.6% in 2023 to 12.1% in 2025.
For companies already leveraging AI, two out of five are progressing from experimental use to broad operational implementation. Firms utilizing AI reported tangible benefits, with nearly 88% citing improved productivity and processes as their biggest gain, followed by 44% noting reduced costs and better resource optimization. These findings were based on an IMDA survey of approximately 7,000 businesses.
Worker Experience and Upskilling Initiatives
Workers are also benefiting from AI, with nearly 86% reporting that they use AI at work in 2026, compared to 78% the year before. The most commonly cited benefits include improved productivity (73% of users) and better work quality (69%).
In terms of usage, employees most frequently deployed AI for content creation, including generating and editing both written and visual material, utilized by almost 77% of users. Other common applications included automating processes (64%) and data analysis (52%).
Despite the high rate of AI use at work, a significant skills gap exists. While 68% of workers acknowledge the necessity of upskilling or reskilling in AI, only 37% reported receiving related training within the past 12 months. Common barriers cited by workers include not being nominated by an employer (35%) and lack of time.
In response to these findings, IMDA is expanding its National AI Impact Programme. This initiative aims to bolster AI skills across both tech and non-tech sectors. Over the next three years, the program will upskill 40,000 tech professionals, equipping them with advanced skills, including know-how in agentic AI. Additionally, it plans to train 100,000 non-tech professionals by 2029 in AI skills relevant to specific domains, such as law and accountancy.
Industry experts provided further context on the challenges. Ang Yuit, president of the Association of Small and Medium Enterprises, stated that “the use of AI is still very uneven among SMEs,” adding that many struggle with securing the necessary time, budget, and manpower to automate processes. Selena Ling, chief economist at OCBC, cautioned that the growth of the digital economy may not benefit all workers equally, suggesting that outcomes will depend on whether workers are in rapidly growing digital domains or in sectors that risk stagnation due to structural skills mismatches or job displacement from automation.
