Singapore – Singapore’s small and medium-sized enterprises (SMEs) are using artificial intelligence (AI) to reclaim working hours and channel them into business growth, according to a new study by Xero.
The research surveyed more than 1,000 local SME decision-makers. It found that 76% of leadership and finance teams lose between three and more than 10 hours each week to manual administrative tasks.
To offset that burden, 46% of respondents direct AI-reclaimed hours towards growth strategies and market expansion. Another 38% focus on product and service innovation, while 33% reinvest the time in upskilling existing staff for higher-value work.
Governance is taking shape alongside adoption, with 67% of SMEs having established formal internal usage frameworks. Data privacy also features prominently in vendor selection, with 90% of businesses prioritising it.
Within that group, 36% will partner only with vendors that explicitly guarantee customer data will not train external models. The remaining 54% prefer providers that offer clear opt-out mechanisms.
“Singapore’s SMEs have a long track record of adapting when change demands it, and AI marks the next chapter in that story.,” said Koren Wines, Managing Director of Xero APAC.
“Our research shows it’s already helping many make the most of their people, time and resources. But the real dividend of AI isn’t simply doing the same work faster. It’s the capacity it gives back, and business owners are clear they’d reinvest that time in growth, innovation and their people,” Wines continued.
The tools themselves are also maturing, as 52% of SMEs now use AI built directly into core software. Examples include cloud accounting, inventory tracking and customer management platforms.
Scaling those workflows, however, remains difficult. Poor data quality was the primary reason AI pilots failed to reach regular production for 31% of SMEs.
Connectivity presents a further gap, with only 18% of businesses fully confident that their software has sufficient context. This covers data history, clean ledgers and system connections needed for automated decision-making.
Costs and skills compound the problem. Integration costs (38%) and staff upskilling (36%) emerged as the leading hurdles to wider AI adoption.
Even so, sentiment remains positive, with 82% reporting that AI returns have met or exceeded expectations. Meanwhile, 69% plan to increase total AI spending over the next 12 months.
Public funding is also playing a part, as 63% of SMEs are using government digital grants to fund technology deployment and training.
“What’s encouraging is that AI is reshaping roles rather than replacing them, with SMEs building capability within their own teams while putting clear guardrails in place. The businesses that pull ahead will be those that pair AI with clean, connected data, strong governance and technology partners they can trust. For Singapore’s SMEs, it’s no longer about adoption. It’s about what happens next,” added Wines.
