Australian startups outpace big businesses in rapid AI adoption

New research from Amazon Web Services (AWS) reveals that Australian startups are adopting artificial intelligence (AI) more rapidly than large enterprises, creating a growing divide in AI-driven innovation across the business landscape.

The report, produced in collaboration with Strand Partners, surveyed 1,000 business leaders and 1,000 individuals in Australia. Findings show that nearly one business every three minutes adopted AI between 2024 and 2025, contributing to a 16% year-on-year adoption growth rate. Half of Australian businesses, or 1.3 million organisations, are now using AI regularly.

Startups vs enterprises

The study highlights a significant difference between how startups and large enterprises are using AI. While 81% of startups in Australia have begun using AI, only 61% of large enterprises report the same. Of the startups, 42% are building entirely new AI-driven products, but just 18% of enterprises are doing likewise. In addition, only 22% of large enterprises have a comprehensive AI strategy.

This trend suggests the emergence of a two-tier economy, where more agile startups are using AI to innovate and capture market advantages, while larger, established businesses risk lagging behind. The report raises concerns that this split could have long-term implications for Australia's economic competitiveness.

Stages of AI adoption

Despite the rise in AI usage, most businesses are still at the early stages of adoption. The survey found that 58% of Australian organisations are using AI primarily for basic activities such as driving efficiencies and streamlining processes through applications like chatbots. Only 17% have reached the intermediate stage, where AI is integrated across multiple business functions, while just 24% are classified as using AI in a transformative way - where it is a core part of decision-making, product development, or the overall business model.

According to the research, 95% of businesses adopting AI reported an average revenue increase of 34%. Productivity improvements were noted by 86% of adopters, with 94% anticipating average cost savings of 38%.

Barriers to AI adoption

The survey identified several challenges preventing broader and deeper AI uptake, particularly among larger organisations. Of respondents, 39% cited a lack of digital skills as a primary barrier. While many companies have access to AI technology and a clear vision for its use, a shortage of skilled personnel often prevents them from realising their ambitions.

Regulation was also highlighted as a concern. Only 24% of respondents stated they were familiar with the ongoing government consultation regarding AI regulation and could explain potential legislation. On average, Australian businesses said they spend about 30% of their IT budgets on compliance, including data privacy, legal advice, and cybersecurity. Nearly three-quarters of businesses expect these compliance costs to increase over the next three years.

"While it's encouraging to see a growing number of businesses in Australia innovate with AI and realise revenue, productivity, and cost benefits, our research has uncovered that barriers such as lack of skills and regulatory uncertainty remain, impacting the ability for larger enterprises to deepen their use of AI,

To accelerate Australia's competitive edge on the global AI stage, it is essential that governments and industry take steps to address these barriers to unlock Australia's full AI potential. At AWS, we are supporting the broad adoption of AI through our new AI Spring Australia program that is focused on building AI capability and skills across different sectors and industries, including large enterprises, as well as through infrastructure investments and skills training initiatives, including our recent investment of AU$20 billion in Australia."

Demand for skills and government leadership

Workforce development is considered a central issue for continued AI advancement. Just over half (51%) of businesses said AI literacy would be important in future hiring, but only 37% felt their current workforce was prepared. Funding, particularly for startups, was seen as critical, with 65% of those surveyed saying that access to venture capital is necessary to foster growth.

The AWS report also highlighted the importance of government action in enabling AI adoption. 86% of respondents indicated they would be more likely to adopt AI if the government took a leading role, particularly by accelerating digital transformation in sectors like healthcare and education, and leveraging public procurement practices to drive innovation.

Suggested actions

The findings point to three priority actions to overcome the barriers to AI adoption and avoid a two-tier economy: building industry-specific skills programmes to support a digitally skilled workforce, establishing clear and supportive AI regulations, and encouraging government leadership, especially in the public sector, to promote digital transformation.

AWS stated its ongoing commitment to supporting AI adoption in Australia through its AI Spring Australia programme, skills training initiatives, and infrastructure investments. The company has trained over 400,000 people in Australia in digital skills since 2017 and outlined plans to invest AUD $20 billion from 2025 to 2029 to expand its national data centre infrastructure.