SINGAPORE – Singapore’s digital economy accounted for 17.7 per cent of gross domestic product (GDP) in 2023 and provided 208,300 tech jobs, according to data released by the nation’s media watchdog.
Its contribution of $113 billion marks a slight decline from 2022, when the sector contributed $115.9 billion to GDP and provided 201,100 jobs.
The digital economy exceeds the financial services and insurance sectors in size, and is comparable to the manufacturing sector, noted the Infocomm Media Development Authority (IMDA) in its annual review report on Oct 29.
The report calculates the digital economy based on two components. The first is the value-add or economic contribution of the information and communications (I&C) sector, which comprises digital services typically associated with the tech industry like telecommunications, computing and software.
The second is the value-add that non-digital industries have from embracing digital technologies and solutions.
The I&C sector alone accounted for 5.7 per cent of Singapore’s GDP in 2023, or around $36.3 billion, up from an adjusted 5.1 per cent in 2022. This was driven by sustained demand for digitalisation by enterprises.
The report said that the sector accounted for a third of Singapore’s digital economy and is the fastest-growing sector.
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The remaining two-thirds came from value-add generated by investments in digital capital within non-digital industries. The bulk of this economic contribution, which amounted to $76.9 billion, came from the finance and insurance industry, followed by wholesale trade and manufacturing.
The digital economy’s growth has created more tech jobs, even amid a more cautious hiring outlook in the tech sector globally and in Singapore. In 2023, tech employment rose by 3.4 per cent from the previous year to 208,300 roles, accounting for over 5 per cent of the nation’s total workforce. Tech jobs have grown by 23 per cent since 2018.
These roles offer competitive salaries and career opportunities, with resident tech workers earning a median monthly salary of 1？ times the overall resident workforce’s median monthly salary in 2023.
The median monthly wages for resident tech workers grew at a compound annual growth rate of 4 per cent from 2018 to 2023, outpacing the 3.7 per cent growth for all resident workers.
The report noted that wages of resident tech workers dipped from around $7,300 in 2022 to $7,000 in 2023 amid a more cautious hiring outlook, but they remain above the $4,550 median for all resident workers.
When asked if tech jobs can remain on an upward trajectory given recent mass layoffs in the tech industry and macroeconomic headwinds, an IMDA spokesman told The Straits Times at a media briefing on Oct 29 that Singapore has been less affected by tech layoffs than other countries.
“Moving forward, we remain cautiously optimistic and we will continue to drive our programmes without slowing down, because our ambition is to train and upskill Singaporeans for the opportunities that are in tech,” he said.
“There may be some seasonal blips moving forward, but we will manage them as a collective.”
The technology adoption rate among small and medium-sized enterprises (SMEs) rose to 94.6 per cent in 2023, up marginally from 94 per cent in 2022.
The report said these SMEs have adopted solutions in at least one digital area, such as cyber security, cloud computing, e-payments, e-commerce, data analytics or artificial intelligence (AI).
But a significant gap in AI adoption persists between larger enterprises and SMEs. In 2023, 44 per cent of larger enterprises had implemented AI technology – more than double the 16.7 per cent in 2018. While SMEs showed improvement, their adoption rate remained modest, increasing from 3.5 per cent in 2018 to 4.2 per cent in 2023.
The report highlighted that more than half of non-SMEs which did not adopt AI cited “potential security issues” as their top concern, followed by “uncertain return on investment or use case”.
For SMEs, 57.5 per cent saw “no need to adopt AI due to the small scale of their businesses”, with other barriers, including insufficient infrastructure and high investment costs, as reasons for non-adoption.
“AI is actually becoming increasingly accessible to SMEs... We’re not expecting SMEs to build AI solutions, we’re asking for them to be aware that actually a lot of the digital solutions out there do have generative AI capabilities, which allow them to do things that they otherwise couldn’t do before,” the IMDA spokesman said.
IMDA said that looking ahead, it will deepen Singapore’s AI ecosystem across three key pillars: enterprises, talent and governance.
In December 2024, the regulator will launch GenAI Sandbox 2.0, an enhanced platform to help businesses experiment with and integrate generative AI technologies more effectively.
Building on the success of its first iteration, the new sandbox will support solutions in marketing and sales and customer engagement, and introduce a new category focused on human resource operations.
Correction note: In a previous version of this article, we mentioned that the local digital economy had grown. This has since been corrected after being informed by IMDA that it had revised the size of the nation’s digital economy in 2022.