Singapore’s technology spending is set to grow about 6% this year, but a shortage of AI-ready workers is already capping returns on artificial intelligence (AI) investments, according to Forrester Research.
The figure sits well below the 9.3% regional average that the market research firm projects for Asia Pacific as a whole, and lags India's 13.4%, China's 10.7%, and Australia's 8.6%.
This highlights a gap between Singapore’s ambitions as an AI hub and its ability to convert investment into results. Singapore hosts major cloud and data centre investments from global technology firms, including Amazon Web Services, Google, Microsoft and Meta Platforms. However, Forrester’s outlook suggests infrastructure alone is not enough to drive returns.
Forrester estimates that Asia Pacific will see US$437 billion ($560 billion) in cumulative technology spending between 2026 and 2030. However, talent remains the main constraint in Singapore, with many firms lacking the in-house AI capabilities needed to fully utilise those investments.
Rising costs are adding to the strain. Software vendors are increasingly bundling AI features into contracts and raising prices at renewal, pushing software inflation above broader price levels. Hardware costs are also climbing, driven by supply chain constraints and tariffs linked to China-origin components. As a result, headline spending growth overstates what organisations can actually deploy in real terms.
Geopolitics adds another layer of uncertainty. Iran's closure of the Strait of Hormuz following US and Israeli strikes in late February has already driven Brent crude above US$100 a barrel, adding direct pressure to energy costs across the region.
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For Singapore, which imports the vast majority of its energy, sustained price increases could further squeeze corporate budgets and technology spending plans. The situation remains fluid, with Iran signalling a partial reopening as of Wednesday while traffic through the strait remains far below pre-conflict levels.
"Chief information officers (CIOs) across the region are grappling with software inflation, hardware volatility, and increasing regulatory divergence that directly impact modernisation plans. To navigate this environment, leaders must shift to highly targeted investments, prioritising automation, AI-enhanced platforms, and modernisation initiatives that deliver measurable productivity gains,” says Frederic Giron, vice president and senior research director at Forrester.
