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APAC organisations to spend more on AI

The higher investments in AI will be led by the region’s banking industry which is harnessing AI systems to mitigate risks and detect fraud

Organisations in the Asia-Pacific (APAC) region are expected to spend more on artificial intelligence (AI) systems over the next three years to improve employee efficiency and speed up decision-making, among other goals, according to research by IDC.

According to the research firm, spending on AI systems will rise from $17.6bn in 2022 to around $32bn in 2025, representing a compound annual growth rate of 25.2% during the forecast period.

Much of the spending will come from the banking industry, which is investing in AI systems to mitigate risks and detect fraud. This is followed by state and local governments, which are increasingly deploying AI in public safety and emergency response applications.

Those in the professional services industry are also expected to spend more on AI to resolve customer issues through augmented customer service agents, and to streamline complex and repetitive business tasks.

Such AI deployments are among the top five use cases that will account for $6.1bn, or 34.5% of total AI spending, and is forecasted to grow to $10.8bn by 2025.

In deploying AI, organisations will spend more on hardware, which will account for more nearly half of their AI spending. The largest areas of investment will be in servers, which will represent over 84% of total spending, while the rest will go towards storage.

Software, on the other hand, will account for 31% of AI spending in the region. Some 71% of total AI spending in software will go towards AI applications and platforms.

“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 Jessie Cai, associate research director for cognitive computing and AI at IDC Asia-Pacific.

“In the long term, clear guidance on the management of the associated risk factors of AI solutions will further boost the confidence level of buying organisations,” she added.

As organisations deploy more AI applications, they will also need to address increasing government regulations and mandates of AI’s trust, robustness, and its ethical use, said Vinayaka Venkatesh, senior market analyst at IDC.

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

Despite the growing momentum of AI, organisations continue to face challenges in scaling up their AI initiatives.

According to an Accenture study, 88% of global executives believed they needed AI for their business to survive, but the same proportion also struggled to scale AI initiatives beyond the pilot stage.

The ability to scale is seen as a barometer of success in AI adoption, given the time, talent and resources involved in AI projects.

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