24% of Hong Kong firms to widely adopt AI, with smaller headcounts expected: KPMG

Nearly a quarter of Hong Kong companies are expected to widely adopt AI this year, a threefold increase from a year ago, while a growing number of business leaders believe the technology will result in smaller headcounts, a survey has revealed.Professional services firm KPMG released the Hong Kong Employment Outlook 2026 on Wednesday, with the poll showing that 24 per cent of organisations were set to widely adopt artificial intelligence (AI), up from just 8 per cent in the previous survey.KPMG-china" class="entity-link entity-organization" data-entity-id="110027" data-entity-type="organization">KPMG China surveyed 281 Hong Kong executives from January 12 to 25, of whom 41 per cent held leadership roles across various sectors.The firm said the acceleration of AI deployment reflected a fundamental shift as companies moved from experimental pilot projects to integrating the technology into core operations.The trend was particularly clear for operations such as innovation and technology product development, and finance and accounting, it added.The survey revealed that fewer respondents believed the adoption of AI would produce more jobs, with 19 per cent of them agreeing with the idea, down from 24 per cent.But the percentage of respondents who believed AI adoption would result in job losses increased from 14 per cent to 22 per cent.The survey found that the weakened outlook was experienced by all surveyed sectors, with the sentiments driven by economic uncertainty, cost pressures and the very automation that was being embraced.The survey also showed that fewer respondents believed AI adoption would produce more jobs. Photo: Dickson LeeThe firm noted that employers were prioritising cost control, productivity and targeted upskilling over broad-based hiring.“Rapid application of AI across organisations is reshaping work patterns, headcount and the skills required in the workplace,” said David Siew, KPMG-china" class="entity-link entity-organization" data-entity-id="110027" data-entity-type="organization">KPMG China’s head of people services.“Coupled with the growing importance of non-monetary drivers for talent, employers must carefully balance their cost profile with their ability to attract and retain talent.”The Hong Kong government has been pushing to speed up the city’s digital transformation and its “AI for all” initiative, which includes a massive overhaul of school curricula and vocational retraining programmes.Further ReadingIn February, Financial Secretary Paul Chan Mo-po unveiled the “AI+” strategy in his latest budget address, with the HK$50 million (US$6.4 million) initiative aimed at popularising AI and enhancing digital literacy across the city.The Innovation, Technology and Industry Bureau will leverage a cross-sector collaboration to bridge the technology gap, with the Productivity Council driving AI adoption among enterprises, while the city’s Science Park and Cyberport both focus on the professional I&T sector, students and the general public.But the KPMG survey showed that while AI was being embraced because of its efficiency, the transition was fraught with operational hurdles.For 32 per cent of respondents, the primary hurdle was identifying providers of quality AI solutions.Other significant challenges included data privacy concerns, a lack of internal expertise and the difficulty of integrating AI into existing business processes – areas that were each cited by 29 per cent of those surveyed.“As AI becomes integral to business, the challenge now lies not in technology but in managing a hybrid workforce of humans and machines,” said Stanley Sum, a KPMG-china" class="entity-link entity-organization" data-entity-id="110027" data-entity-type="organization">KPMG China partner and its head of technology.