Artificial Intelligence spending in APAC to reach $32 billion in 2025

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Artificial Intelligence spending in Asia-Pacific to reach $32 billion in 2025: IDC

Singapore: Artificial Intelligence spending in Asia-Pacific to reach $32 billion in 2025, at a CAGR of 25.2% for the period 2020-25, according to IDC.

IDC’s latest Worldwide Artificial Intelligence Spending Guide reveals that Artificial Intelligence spending in Asia-Pacific, excluding Japan, will rise from $17.6 billion in 2022 to around $32 billion in 2025.

AI spending

The AI spending is largely driven by businesses that are looking to gain a competitive advantage through improved customer insight, increased employee efficiency, and accelerated decision making. IDC forecasts a compound annual growth rate (CAGR) of 25.2% for the period 2020-2025.

“Many of the changes caused by the pandemic will stay and we expect the adoption momentum of practical AI use cases such as remote or contactless engagement to continue,” said says Jessie Danqing Cai, Associate Research Director, Cognitive Computing/Artificial Intelligence for IDC Asia/Pacific.

“In the long term, a clear guidance on the management of the associated risk factors of AI solutions will further boost the confidence level of buying organizsations,” adds Cai.

Industries investing in AI

Among the industries, the banking sector over the next five years will continue to invest the most in AI solutions. The AI investment would happen in the key areas of risk mitigation, augmented threat intelligence and fraud analysis applications.

State/local government is the second-highest spender on AI solutions, focusing on public safety and emergency response, augmented threat intelligence, and prevention systems.

For the next five years, the next top spending industry is professional services, growing fast with 26.6% (CAGR). The key focus area is augmented customer service agents, which help resolve customer issues. Smart business innovation and automation will optimize and streamline complex and repetitive business tasks to support organisational decision-making.

“Increasing government regulations and mandates of AI’s trust, robustness, and its ethical use will need to be addressed by organisations,” says Vinayaka Venkatesh, Senior Market Analyst – IDC IT Spending Guides, Customer Insights & Analysis.

“Customer-facing industries such as financial services, hospitality and tourism will take the lead in addressing these government mandates,” adds Venkatesh.

The top five use cases account for $6.1 billion or 34.5% of total Artificial Intelligence spending. And it is forecasted to grow to 10.8 billion by 2025. Investments in use cases such as augmented customer service agents, sales process recommendation and augmentation, and smart business innovation and automation solutions are pervasive across all industries.

These solutions enable organisations to provide a better customer experience while also saving time in the decision-making process. State and local governments are spending more than 64.3% of total AI spending on public safety and emergency response solutions that address new and emerging threats and improve emergency/disaster planning and response.

Similarly, the BSFI sector invests around 25% of total AI spending on fraud analysis and investigation AI solutions to detect fraudulent transactions and anomalies.

Hardware will be the leading technology, accounting for more than 49.8% of AI spending; the largest areas of investment will be in servers, accounting for more than 84% of total spending, while the rest will go toward storage. Software is the second leading technology with 31% of AI spending.

71% of total AI spending in Software goes towards AI Applications and Artificial Intelligent Platforms. Services have the fastest spending growth, with a five-year CAGR of 34.3% in technology.

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