Report: Canadian SMBs Focus on AI and Tech Adoption
A new report on the state of HR in Canada finds that AI, technology adoption, recruitment, and employee experience are key challenges for small and medium-sized businesses. The "2026 State of HR" report from Folks surveyed over 400 SMBs to identify their primary concerns and areas of investment. The findings highlight a broad push among smaller companies to integrate new technologies into their core operations.
- A late 2025 Sage survey found that while nearly half of Canadian SMBs use AI, progress is stalling due to a lack of internal expertise and the cost of implementation. This creates a "two-speed digital economy," with sectors like finance and technology adopting AI much faster than fields such as construction and agriculture. - To overcome financial barriers, the Canadian government's Budget 2021 allocated $4 billion to the Canada Digital Adoption Program (CDAP). This program offers a "Boost Your Business Technology" grant of up to $15,000 to help SMBs develop a digital adoption plan and a "Grow Your Business Online" grant of up to $2,400 for e-commerce tools. - Further federal support comes from a $300 million initiative to boost AI adoption, which includes the Regional Artificial Intelligence Initiative (RAII) and the $100 million AI Assist program to help SMBs with generative AI and deep learning R&D. - Despite these programs, a Q3 2025 Statistics Canada survey showed that 66.7% of businesses had no plans to adopt AI in the next year, with 78.1% of those stating AI was not relevant to their services. This highlights a significant awareness and education gap. - When SMBs do adopt AI, the primary applications are in data analytics, virtual agents or chatbots, and text analytics. After adoption, the most common changes businesses make are developing new workflows (40%) and training current staff (39%). - The push for tech is also reshaping hiring, with a 2026 Robert Half report indicating significant skill gaps in AI literacy (50%) and a rising demand for candidates with strong soft skills like critical thinking and creativity to complement AI tools. - For HR departments, 2026 priorities include using AI and automation to simplify processes, allowing teams to focus on strategic work rather than repetitive tasks. However, a survey by Paylocity reveals that security, data privacy, and limited internal expertise are top barriers to adopting AI in HR. - Recruitment itself is being transformed, with a greater emphasis on skills-based hiring over degrees or experience and the need to balance technological efficiency with genuine human connection to attract top talent.
