AI Becomes Core to HR in Southeast Asia, But Readiness Gap Slows Scale

| Written by Riya Malhotra

Artificial intelligence is rapidly becoming embedded in HR functions across Southeast Asia, but organisations are struggling to scale its impact, according to a new study by ETHRWorld Southeast Asia & SAP SuccessFactors.

The report finds that 75% of organisations are already using AI in HR, signalling a clear shift from experimentation to mainstream adoption. At the same time, 65% expect AI budgets to increase in 2026, reflecting its growing role as core workforce infrastructure.

However, readiness remains a significant challenge. Only 11% of organisations report being fully prepared to scale AI enterprise-wide, exposing a gap between investment and execution. Many are still in early or moderate stages of preparedness, with key capability gaps in data analytics, implementation skills, and change leadership.

AI adoption is currently strongest in learning and development and recruitment, areas closely tied to talent competitiveness. Markets such as Singapore and Malaysia are leading in integration maturity, while others remain in earlier stages of adoption.

Importantly, the study highlights a shift in how AI is creating value within HR. Rather than focusing purely on automation, organisations are increasingly leveraging AI to enhance decision-making, positioning HR as a more strategic, data-driven function. As AI becomes central to workforce systems, the findings point to a clear next step: building organisational capability alongside technology investment. Without this, scaling impact across the employee lifecycle may remain out of reach.

Source: ETHRWorld