Revenue, employment improve with business AI use: MTI report

Workplace use of artificial intelligence is linked to quick gains in revenue and employment, though not yet to higher productivity and profit, a new study has found.

Businesses here saw revenue increase by 16 per cent one year after adopting AI in their operations, while employment went up by 8 per cent in the same period, a Ministry of Trade and Industry (MTI) report released on Tuesday (Aug 11) indicated.

Net employment growth does not rule out some job losses, but “these are more than offset by new hiring”, said Infocomm Media Development Authority senior economist Sarah Liu, the report’s author.

Gains for workers, businesses

For now, the adoption of AI is mainly benefiting higher-income and mid-career workers: those earning S$7,000 to S$10,000 a month, and those aged 35 to 44 years.

This is as higher-income workers are likely to be in roles where AI can automate routine tasks, which leaves them free to focus on tasks that require skills such as human judgment, while mid-career staff usually have the know-how to adapt to new workflow designs.

Businesses’ AI use has also pushed up hiring for better-paid and higher-skilled foreign Employment Pass holders, which the report attributed to demand for specialised expertise.

Larger companies and those in sectors such as infocomm, electronics, professional services and finance and insurance were more likely than their peers to use AI.

Liu noted that AI use boosted employment by 18 per cent in wholesale trade, possibly by allowing businesses to expand on improved demand forecasting, inventory planning and logistics optimisation. The use of AI also increased revenue by 24 per cent in this sector.

AI-related headcount growth came in at 19 per cent in information and communications, along with gains of 23 per cent in revenue and 16 per cent in profit. Headcount grew by 10 per cent and revenue increased by 12 per cent for AI-using professional services firms.

Meanwhile, companies in finance and insurance that used AI posted the largest increases by sector – both in revenue, to the tune of 21 per cent, and in profit, which rose by 73 per cent.

These businesses also saw growth of 21 per cent in average local wages, which Liu said could reflect a shift towards higher-income and more productive workers.

New AI transformation ahead

Recommending more tailored support for businesses to take up AI, Liu said: “This may entail identifying sector-specific AI use cases with larger returns, or the provision of support to smaller firms that may lack internal capabilities to effectively integrate AI.”

On the whole, though, she found that businesses did not see a statistically significant increase in productivity and profit in their first four years of introducing AI.

“This could be because the full benefits of AI may only materialise after complementary investments are made,” said Liu.

She observed that the prior introduction of tech capabilities such as cybersecurity and data analytics are likely to lay the groundwork for AI adoption.

She also noted that the estimates reflect only the early impact of AI take-up until 2024, and not more widespread adoption or the development of new capabilities, such as agentic AI.

Manik Bhandari, Asean data and AI leader at professional services firm EY, is already seeing more “human-hybrid workforces” where employees manage teams of AI agents.

The scale-up of this operational model will likely drive a statistically significant jump in revenue, he told The Business Times.

“As AI becomes increasingly embedded into business workflows, we expect an uplift in returns of investment,” he added.

Professor Will Cong, associate dean at Nanyang Technological University’s Nanyang Business School, warned: “If newer AI merely replicates existing human functions more cheaply, displacement (of human workers) can dominate even as revenue rises.”

Indeed, businesses can now use agentic and off-the-shelf AI solutions without needing to hire specialised talent, noted Prof Cong, who is an expert on AI in economics and finance.

He added, however, that AI use should still lend uplift to Singapore employment in the medium term, with broader wage gains to come due to supportive policy.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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