Australian firms boost data privacy investment amid AI adoption

Australian organisations are increasing their investment in data privacy as they adopt AI technologies at scale, according to a new study by Zoho.

The report, based on a survey of 343 business leaders across Australia, found that 82% of Australian organisations are investing in data privacy, surpassing the global average of 78% and the US at 72%. This comes amid public concerns about data privacy and AI-driven cyber attacks in the country.

The research, entitled 'The AI Privacy Equation: Australian Organisations at the Crossroads', provides a detailed picture of how AI is impacting both organisational practices and perceptions regarding privacy. According to the study, 65% of organisations surveyed said AI is strengthening privacy safeguards within their businesses, countering fears that AI adoption could weaken data protection.

Despite these advances, the study also reveals that data quality issues (cited by 42% of respondents) and ongoing privacy or security concerns (35%) continue to serve as barriers to broader adoption of AI in Australia. The challenges underline the need for cautious and well-managed implementation of AI solutions, particularly as organisations deal with sensitive information.

Safeguards and compliance

Australian organisations appear proactive in embedding privacy safeguards. The report finds that 48% have implemented documented privacy policies and 46% conduct regular audits. A significant 85% report having a dedicated privacy officer responsible for overseeing these efforts. Monitoring remains important, with 40% stating they closely track AI systems, particularly if issues are detected. On customer data matters, 44% say they prioritise explicit consent before handling sensitive information, reflecting a focus on transparency and trust-building.

Rakesh Prabhakar, Head of Zoho Australia and New Zealand, commented on these findings, stating,

"AI and privacy are often seen as opposites, but our research shows a different reality inside Australian organisations. When businesses 'AI up', they're forced to 'privacy up' - it's an operational necessity, not altruism. Yet this progress often remains invisible to customers, creating a gap between perception and organisational reality. As reforms progress, compliance will only become stricter, making early investment in privacy a competitive advantage."

Regulatory environment and perception gaps

Australia's regulatory framework, with legislation such as the Privacy Act, is cited as a significant driver of privacy investment. Culturally, a strong value is placed on privacy, and customer data breaches are the top concern for 35% of organisations surveyed.

Despite these improvements in governance, fewer than half (44%) of organisations feel confident they can clearly articulate how AI utilises data to customers. This points to an ongoing gap between operational improvements and public perceptions, with transparency still a work in progress for many businesses.

The report also highlights additional challenges. Skills shortages are prominent, with 63% of respondents pointing to a lack of data analysis expertise, and more than half noting gaps in AI literacy among staff. Furthermore, 29% of businesses admit they lack clear visibility into the privacy implications of their AI systems.

On these future challenges, Rakesh Prabhakar added,

"The good news is that Australia has the right foundations. The next 12-18 months will be critical as reforms are implemented and organisations shift from reactive compliance to proactive privacy-by-design. Those that succeed will build a competitive advantage, while others risk regulatory and reputational fallout."

Impact on jobs and investment

Australian organisations are reportedly directing notable investments into areas where AI can have a direct impact. According to the report, 45% are applying AI in customer service and software development categories. Notably, the research indicates that fears about AI-induced job losses may be overstated: almost a third (32%) of businesses surveyed have increased hiring as a result of AI adoption. Additionally, 41% think AI-related skills will be a recruitment focus in the future. The central challenge, according to the findings, is ensuring Australia develops a workforce with the capabilities to govern and responsibly deploy AI at scale.

Michael Fauscette, Founder, CEO and Chief Analyst at Arion Research, who led the research, said,

"There's a widely held perception that AI threatens privacy, but studies like this show the opposite. When deployed responsibly, AI can reinforce trust and compliance. Surveying business leaders provides local insights into on-ground practices, demystifying perceptions of AI's impact on privacy. These findings mirror trends we observe in adjacent industries and markets, revealing the complementary nature of AI and privacy."

The study provides a broad base of data from leaders across industry sectors, company sizes, and roles, underlining trends across the wider Australian business landscape.