SINGAPORE: A new study shows that investments in the digital economy are likely to have the biggest payoffs in the years to come.

Recent research from Capgemini, a global company combining market expertise in strategy, technology, data science, and creative design, says that the global eco-digital economy, now at US$16.6 trillion, is set to almost double to US$33 trillion in the next five years.

“However, we are at the dawn of the eco-digital era; the vast untapped potential of digital technologies awaits exploration,” Capgemini says in its Eco-Digital Era report, which surveyed 1,500 senior executives, 1,350 large organizations, and 150 startups across the globe. Five per cent of the respondents are based in Singapore.

The research shows that investing in digital transformation is predicted to yield the largest returns for organisations in Singapore.

In Singapore, the digital economy is defined as digital advancements combined with sustainability.

For example, the yearly return on investment in digital transformation for 2023 was 6 per cent. By 2028, this is expected to almost triple to 17 per cent.

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In comparison, the global average return for last year was 4 per cent, projected to increase to 14 per cent in 2028.

In Singapore, the eco-digital economy makes up 0.6 per cent of its domestic GDP.

Screengrab from Capgemini’s Eco-Digital Era report

The biggest winners will likely be mainstream technologies, including data analytics and cloud, which the research shows will “unlock new revenue streams, enhance cost efficiencies, and expedite sustainability initiatives.”

Capgemini says that changes in the eco-digital economy are driven by digital technologies’ role in reducing emissions rather than offsetting own carbon footprints.

“The eco-digital economy is unlike anything that has come before it, and society has harnessed only a fraction of the overarching potential that mainstream technologies such as cloud, AI, and automation hold.

Organizations will need to leverage focused efficiencies in their core business, enabled by digital, in order to free up investment to support their dual transition,” said chief strategy and development officer at Capgemini Fernando Alvarez.

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Over the past five years in Singapore, digital technologies have aided in cutting energy consumption by 27 per cent and lowering greenhouse gas emissions by 22 per cent.

Nearly four out of five (78 per cent) of the organizations that participated in Capgemini believe that the transition toward a digital and sustainable economy is already underway all across the globe, and almost half of the participants said that they have teams whose main focus is to attain companies digitisation targets. /TISG