Deloitte report highlights rapid growth of agentic and physical AI in Singapore

The Deloitte AI Institute has released the 2026 edition of its State of AI in the Enterprise report, offering a detailed snapshot of how organisations are adopting artificial intelligence and the strategic challenges that come with it. Titled The State of AI in the Enterprise: The Untapped Edge, the study is based on a survey of more than 3,000 director- to C-suite-level leaders globally, including 75 respondents from Singapore, all of whom are directly involved in AI initiatives within their organisations.

The findings suggest that AI adoption in Singapore is entering a more mature phase. Around 32 percent of respondents in the country reported that at least 40 percent of their AI pilots have already moved into production, notably higher than the global average of 25 percent. This signals a shift away from isolated trials towards broader enterprise deployment, as organisations seek clearer returns on earlier experimentation.

Despite this progress, the transition from pilot to production remains complex. Many organisations are balancing the need to maintain existing systems while investing in new AI capabilities that can support long-term competitiveness. The report notes that “pilot fatigue” remains a real risk, particularly where projects lack a clear pathway to scale. A coherent AI strategy, supported by defined roadmaps and leadership commitment, is highlighted as essential to sustaining momentum beyond experimentation.

Productivity gains outpace deeper business transformation

Most organisations in Singapore are already seeing tangible benefits from AI adoption, particularly in efficiency and productivity. About 73 percent of respondents reported productivity improvements, exceeding the global average of 66 percent. More than half also indicated that AI has improved decision-making by providing better data-driven insights, aligning closely with global trends.

However, the report indicates that these gains are largely incremental. Only one-third of leaders in Singapore said their organisations are redesigning key processes around AI while keeping their core business models intact. Even fewer, at 28 percent, are using AI to fundamentally reinvent their business models or core processes, although this figure still compares favourably with the global average of 17 percent.

Several barriers continue to slow deeper transformation. Regulatory and compliance concerns were cited as the top challenge by 27 percent of respondents in Singapore, followed by gaps in AI skills and knowledge at 24 percent. High implementation costs and limitations in technology infrastructure were also highlighted. In response, organisations are prioritising workforce readiness, with 53 percent focusing on building AI fluency across teams. Nearly half are also redesigning career paths and mobility strategies to reflect the impact of AI, a significantly higher share than the global average.

Agentic and physical AI reshape operations and governance

The report points to agentic AI as one of the fastest-growing areas of adoption. Nearly three-quarters of organisations in Singapore plan to deploy autonomous AI agents across multiple operational areas within the next two years, up sharply from just 14 percent today. Similar momentum is seen globally, reflecting growing confidence in systems that can act autonomously rather than simply provide recommendations.

Planned use cases for agentic AI span customer service, supply chain and logistics, and marketing and sales. Despite this enthusiasm, governance frameworks have not kept pace. Only 14 percent of leaders in Singapore reported having mature governance models in place for agentic AI. Many organisations rely on a mix of public and internal frameworks to manage risk and performance, highlighting a gap between ambition and oversight.

Physical AI is also expected to see rapid growth. Defined as AI systems that perceive the real world and drive physical actions through machines or control systems, physical AI is projected to be used by 84 percent of businesses in Singapore within two years, up from 53 percent today. Leaders see strong potential in areas such as digital twins, collaborative robotics, and intelligent security and monitoring systems. At the same time, the report stresses the importance of security, resilience, and interoperability to ensure trust and public acceptance.

Sovereign AI considerations are becoming increasingly central to strategic planning. Around 77 percent of organisations in Singapore view data residency and in-country or in-region compute as important to their AI strategies, while more than half are concerned about over-reliance on foreign-owned AI technologies. The report advises organisations to clarify which data and workloads must remain local, establish clear policies for cross-border data flows, and ensure transparency and auditability across markets.