Businesses aware of the need to transform

Local enterprises are making headway in their business transformation journey, but manpower challenges are still troubling

After years of support and encouragement by the government to innovate, the large majority of Singapore companies are now aware that they need to transform their businesses to thrive in today’s digital world.

This piece of good news for the local business community emerged from SBF’s annual National Business Survey (NBS) 2019/2020; which drew responses from over 1,000 companies across all major industries. The survey also found that many local enterprises are not slowing their internationalisation efforts despite the uncertain macroenvironment.

But there were also less encouraging findings. For instance, despite citing manpower challenges as their top issue in this year, four in 10 companies still have not done anything to address the situation.

From awareness to action

Nine in 10 (94%) Singapore companies acknowledged the importance of transformation to stay relevant and competitive, and to improve business efficiency in the face of changing market dynamics, the NBS found.

Unsurprisingly, technology continues to play a major role in this process. While two in three (66%) believe that adopting new technology is fundamental to their own transformation and survival, the biggest roadblock is perceived cost, followed by challenges such as training or adapting staff to use new technology, and cyber security risk.

Encouragingly, some 27% of respondents are optimistic about getting positive returns from their investment in digitalisation and e-commerce transformation, despite the challenges.

“The shift in mindset is a big step in the right direction and we hope to see this increased awareness translate into action. The perceived high cost of technology adoption is a common misconception. Companies can start small, such as setting up a website or getting on social media,” said SBF CEO Mr Ho Meng Kit.

“In the coming year, SBF will continue to support our companies on their transformation journey through education and outreach on new technology showcases, the sharing of best practices among companies and self-assessment tools on digital readiness.”

Singapore businesses are also not slowing their forays abroad despite the volatile global landscape, with eight in 10 businesses said they now have an overseas presence. SMEs were particularly active, with 78% of such businesses having an international presence last year, compared to 68% in 2018. Southeast Asia remains the most popular region for expansion, with 82% of Singapore businesses reporting a presence in the region.

Coping with short-term challenges

The survey found that the top challenge for local businesses this year was manpower costs (67 per cent), followed by business competition (62 per cent) and finding new or better ways to grow revenue (56 per cent).

Yet, close to half the companies surveyed say they have yet to implement any strategies to cope with their manpower challenges. The majority have implemented at least one strategy, and only one in 10 have rolled out three or more actions to deal with talent-related issues.

“It is a critical issue that companies must be addressing. I believe that 90% of companies should have done at least one thing to deal with the manpower issue,” said Mr Ho.

To cope with near-term issues, many local firms are hoping for more relief when the government unveils Budget 2020 on Feb 18. At the top of businesses’ wish lists for this year’s Budget are tax reliefs and better access to government resources.