Digital transformation to contribute $10 billion to Singapore GDP by 2021: Microsoft

The Straits Times

Digital transformation is expected to add $10 billion (S$13.2 billion) to Singapore’s GDP by the year 2021, Microsoft said on Wednesday (Feb 21).

According to research done by the tech giant and research firm IDC Asia/Pacific, Singapore’s GDP growth could also increase by 0.6 per cent annually as a result.

Over the next few years, the pace of digital transformation will dramatically accelerate across Asia Pacific, with Singapore clearly on the fast track, the research found.

Last year, about 10 per cent of Singapore’s GDP was derived from digital products and services created directly through the use of digital technologies, such as mobility, cloud, Internet of Things (IoT), and artificial intelligence (AI).

“Within the next four years, we expect to see approximately 60 per cent of Singapore’s GDP to be derived from digital products and services,” said Kevin Wo, managing director of Microsoft Singapore.

The study of more than 1,500 mid- and large-sized organisations across Asia Pacific, also found that the top five benefits associated with digital transformation in Singapore include higher profit margins; greater productivity; increased revenue from new products and services; improved customer advocacy; and increased cost reduction.

Microsoft Singapore

Business leaders surveyed were already seeing 17 per cent to 20 per cent improvements from their efforts today, and expect to see more than 40 per cent improvements in the same key areas by 2020.

And while most (98 per cent) Singapore firms surveyed had already started digital transformation, only 7 per cent of firms in the region could be considered leaders in the movement, Microsoft said.

Leader organisations are those that have full or progressing digital transformation strategies, with at least a third of their revenue derived from digital products and services, and are seeing around 20 per cent to 30 per cent improvements in benefits across various business areas.

“The pace of digital transformation is accelerating, and IDC expects that by 2021, at least 60 per cent of Asia Pacific GDP will be digitalised, with growth in every industry driven by digitally enhanced offerings, operations and relationships,” Daniel-Zoe Jimenez, IDC Asia/Pacific’s research director digital transformation practice lead, said.

Findings from the study also showed that leader companies stood out from the rest in five key areas.

Microsoft Singapore

These include being more concerned about competitors and disruptive technologies; aiming for business agility and culture of innovation; measuring digital transformation successes; being aware of challenges in the digital transformation journey; and investing in AI and IoT.

Digital transformation benefits society too

Digital transformation is positively viewed by business leaders in the region, with increased educational and training opportunities, higher value jobs and higher income from freelance and digital work seen as the top benefits for society.

Singapore business leaders surveyed said that 93 per cent of jobs would be transformed within the next three years, with 62 per cent of all jobs redeployed to higher value roles or re-skilled.

“What is encouraging is that 83 per cent of the study’s respondents are confident that their young professionals already have future-ready skills that will help them transition to new roles. Governments and organisations should still focus on reskilling and upskilling, because continuous learning will be important in ensuring a successful workforce transformation for the digital age,” Mr Wo said.

Microsoft Singapore, which recently partnered Singapore’s Infocomm Media Development Authority for the latter’s Industry Transformation Map, said that companies need to accelerate digital transformation further to reap its full benefits.

Microsoft Singapore

To do so, companies should create a digital culture, build a digital ecosystem, embrace micro-revolutions, bet on AI, and develop future-ready skills for employees and organisations.

A recent LinkedIn report identified the top in-demand skills for Singapore as big data, artificial intelligence, and cloud computing.