2024 SME barometer reveals spending trends in APAC

Instarem, a part of Nium, has released the 2024 SME Spend Barometer, highlighting spending behaviours of small and medium-sized enterprises (SMEs) in Singapore, Australia, and Malaysia.

The report, which is based on data from a sample of 700 SMEs and qualitative interviews, analysed spending patterns from January 2023 to August 2024. It shows how SMEs are investing in technology, infrastructure, and talent to navigate an evolving economic landscape.

Singapore saw a 27% year-on-year decline in export payments, suggesting that businesses may be prioritising domestic interests in response to rising costs and economic pressures. This stands in contrast to a 6% increase in export payments driven by Malaysia and Australia, indicating a cautious yet optimistic approach to global expansion.

Yogesh Sangle, Global Head of Instarem, stated, "Instarem has supported thousands of businesses in their growth journeys over the years. Expanding overseas allows SMEs to tap into broader customer bases and unlock market opportunities to achieve scale and growth. While a degree of caution is understandable in today's climate, we anticipate that SMEs will continue to identify and seize opportunities that align with their goals."

Digital transformation and AI adoption are on the rise across the Asia-Pacific region, with a 29% increase in IT spending compared to 2023. Malaysia and Australia are taking the lead in IT investments, with sectors such as F&B, IT and software services, and business consultancy showing significant growth in expenditure.

Many SMEs are turning to digital tools, including AI-driven solutions, to reduce costs and enhance efficiency. This includes investing in workflow automation, AI-driven fraud detection, and advanced data analytics.

Despite the general trend towards increased technology spending, some industries like financial services and business services have reduced their expenditure on information services by 42% and 4%, respectively.

SMEs are also reinvesting in physical infrastructure, evidenced by a 16% increase in office expenses. Sectors such as retail and wholesale and business services have seen office expense increases nearing 150% and 70%, respectively. This shift is indicative of businesses positioning themselves for long-term growth.

George Votava, Group Managing Director at Net Fusion Technology, commented, "Employee demand for in-office collaboration has driven our decision to invest in physical office spaces in the Philippines and Vietnam. Balancing these investments with our offshoring model allows us to better manage costs while fostering greater collaboration and innovation."

Despite economic pressures, SMEs have not significantly reduced talent investments, with salary spending up by 7%. In Singapore, salary investments have remained stable, with sectors like media and marketing and business services increasing their spending on external advisors to foster growth. This suggests a strategic shift towards supplementing expertise without expanding internal teams.

In Australia, SME salary payments rose by 3%, aligning with the Wage Price Index and the national minimum wage increase. This indicates businesses are prioritising competitive pay and retaining essential talent while managing costs effectively.

Findings indicate that SMEs are concentrating on high-impact investments like digital transformation while implementing measured strategies across other areas. However, challenges remain, such as fluctuating exchange rates and high processing fees.

"Managing costs is a top priority for SMEs, particularly in critical areas like talent and expansion," said Sangle. "Thinking strategically about payments can not only help to reduce high cross border fees and improve cash flow — it can free up crucial resources for growth and set SMEs up for long-term success."