Micro-Firms Exhibit Caution on Business Momentum Compared to SMEs and Large Corporations

The inaugural Huawei Digital Business Index, conducted by Amárach Research, shows positive business momentum among SMEs and large corporates, however it highlights a cautious outlook among Ireland’s micro-enterprises (small businesses with fewer than 10 employees) as they approach the year’s end.

The Huawei Digital Business Index aims to track key digitalisation themes affecting businesses operating in Ireland and provide an insight into trends shaping the Irish business environment. Amárach Research surveyed 350 decision-makers from various sectors and business sizes across Ireland to gauge sentiment as the year draws to a close and as planning for 2025 begins.

The overall Huawei Digital Business Index score stands at a positive 58.9, though micro-enterprises report a significantly lower sentiment (43.4), while larger firms and corporates report a notably higher index score of 74.4.

Spending intentions

When asked about spending intentions, across seven categories, through to the end of 2024, responses indicate an anticipated increase in IT software investments (including cloud services), alongside a projected decline in spending on electric transport.

Almost half (49%) of the 350 survey respondents cite concerns over rising costs attributed to inflationary pressures in both labour and supply chains, nonetheless a third of these businesses expect a positive increase in turnover by year-end. However, more than half (56%) of leaders recognise that building talent and a culture focused on digital advantage will be the defining factor in driving successful digital transformation over the next five years.

AI Adoption

In terms of AI adoption, approximately 10% of surveyed businesses, primarily in the B2B sector, identify as advanced users of AI. The bottom line is that over one in three (35%) firms in our survey do not utilise generative AI in any aspect of their business, and a similar proportion do not intend using it. This rises to half (52%) of micro firms (fewer than 10 employees).

Commenting on the results, Calvin Lan, CEO of Huawei Ireland, said: “The Huawei Digital Business Index, a first-of-its-kind report, highlights a robust growth outlook for Irish businesses through 2025, driven by proactive efforts and digitalisation. While there is optimism about the upcoming months, companies said that growth does not ‘simply happen’, thereby recognising the importance of proactive effort to drive growth. Building, and retaining, talent is a crucial aspect of looking to the future of business and the economy.”

He added: “The role of digital infrastructure in ensuring economic resilience cannot be overstated and digitalisation remains a crucial growth point for indigenous Irish businesses. While smaller and micro firms show lower confidence in digital investments facing more challenges with digital transformation and technology adoption. Larger companies need to play a supporting role through education, awareness and engagement whether that is webinars, workshops or free cloud credits to boost digital adoption among micro firms, so that they are not left behind which will, in turn, will lead to a strengthening of the broader economy.”

Digitalisation

Regarding the benefits of digitalisation, respondents cited cost reduction as the primary advantage (64%), with compliance management ranking at 38%. Although cost reduction is critical across sectors, the Index reveals that B2B firms are more likely to prioritize regulatory compliance as a digitalisation driver than B2C firms. However, limited budgets (43%) and lack of knowledge (35%) are noted as primary obstacles to digital investment, especially for companies where employees may find it challenging to keep pace with technological change.

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