Under-investment in people-facing functions fuelling a 'digital tax' in Southeast Asian workplaces, report finds
Human resources and employee experience functions are trailing significantly behind IT and finance in digital transformation efforts across Southeast Asia, according to new research, which warned that this imbalance could undermine the region's broader AI ambitions.
The findings come from a new report commissioned by enterprise AI workspace provider Lark, which surveyed 900 employers and more than 5,000 employees across Singapore, Malaysia, Indonesia, Thailand, the Philippines, and Vietnam.
The report revealed what it dubbed an "efficiency-first bias" in how organisations are allocating digital investment.
IT departments (69%) and finance functions (60%) are the most likely to be fully digitised, while employee experience (48%) and HR (47%) fall behind, according to the findings.
"Digital transformation is currently treated as a functional upgrade rather than a human one," the report read. "Investment is heavily skewed toward departments that drive immediate cost-savings."
Creating a 'digital tax' at work
The report warned that prioritising back-office efficiency over human touchpoints has created a "digital tax" on the workforce.
This means the daily digital experience of the workforce has been fragmented, and characterised by overburdened tool landscapes and unclear workflows.
The research found that 55% of employees lose three or more hours a week to digital collaboration inefficiencies, and 71% feel overwhelmed by the sheer number of tools they are required to use.
The digital tax also manifests through the lack of autonomy in the workforce, where just 28% of employees feel empowered to introduce new ideas, and only 34% have meaningful control over their work tools.
According to the report, the digital tax is also creating a training divide, where employers are significantly more likely to have received training on new technologies.
Fixing the 'digital tax'
The report underscored that successful AI-driven transformation in Southeast Asia will depend on aligning leadership vision with employee reality.
It noted that organisations that simplify their tool landscapes and empower their people will have a "formidable competitive advantage" for productivity, innovation, and talent retention.
"Organisations that will lead in this next chapter of digital transformation are not those that simply move fastest on AI, but the ones that also bring their people with them. That means being transparent about how AI is being used, investing in the people expected to work alongside it, and building environments where technology genuinely serves the workforce," said Olivier Adam, General Manager, Asia Pacific at Lark.
"AI's potential is immense, but it will only be fully realised when employees feel equipped, included and confident in how it is being deployed."
