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Asia-Pacific AI Spending to Reach $78 Billion

Demand and spending on Artificial Intelligence (AI) ) within the Asia-Pacific region will grow to reach $78.4 billion in 2027, according to the latest market study by International Data Corporation (IDC).

The increase in AI spending reflects a shift toward leveraging technology to transform operations, improve customer experiences, and maintain a competitive edge in a rapidly changing market.

IDC forecasts a compound annual growth rate (CAGR) of 25.5 percent for the period 2022-2027.

Artificial Intelligence Market Development

With a market share of 28.5 percent in 2023, the Professional Services industry is the primary leader in AI application adoption, growing at a CAGR of 22.4 percent during the forecast period.

AI investment in professional services is on AI infrastructure provisioning, where end-users gain access to the resources for computing and storage, and for AI system development or the provision of AI services.

In the banking industry, AI is revolutionizing customer experiences through personalized financial recommendations and efficiently detecting fraudulent activity or the increased risk of fraud.

Retail industries are harnessing AI to transform customer interactions. AI-enabled customer service agents, personalized recommendations, and dynamic pricing strategies enhance customer engagement.

"In the dynamic landscape of AI evolution, Generative AI has gained a huge momentum. The majority of the organizations in Asia-Pacific started investing in AI or are navigating its potential in 2023," said Vinayaka Venkatesh, senior market analyst at IDC.

Key challenges while exploring GenAI are trustworthiness, privacy, security, copyright, and finding a suitable business partner. However, these hurdles can be overcome when the technology matures.

Infrastructure provisioning is a leading use case where service providers create and manage IT infrastructure. Infrastructure service providers grant access to users, providing resources for computing and storage for AI systems development, or the provision of AI services to customers.

Augmented customer service agents are the second fastest growing use-case, which focuses on improving customer experiences through instant query resolution, efficient issue escalation, and tailored recommendations.

Sales process recommendation and augmentation is the next use case, used to analyze customer behavior and historical data to provide real-time insights and make data-driven decisions to improve customer engagement.

IDC has forecast that the GenAI market is poised to expand by $3 billion in 2027, with a CAGR of 85 percent from 2022 to 2027 within the Asia-Pacific region.

As the field of GenAI continues to evolve, IDC anticipates that use cases will diversify and become more tailored to specific industry applications.

China continues to be the leader in AI adoption in terms of AI spending, accounting for 50 percent of the region's total, which is expected to reach nearly $38.4 billion by 2027 at a CAGR of 24.8 percent.

The Asia-Pacific region is emerging as a vibrant hub of AI innovation, accounting for 34 percent of total AI spending, which is expected to grow at a CAGR of 26.8 percent to nearly $28.2 billion by 2027. 

AI adoption is being led by countries such as India, Australia, and Korea. The region's AI commitment favors economic growth, digital transformation, and technological leadership.

Japan is the third-highest region in AI solutions, with a $12 billion investment expected by 2027 growing at a CAGR of 25 percent. The country's commitment to research is yielding breakthroughs in AI-powered automation and analytics.

Outlook for Artificial Intelligence Apps Growth

IDC predicts AI systems will grow into an essential IT tool for businesses to improve productivity and better engagement with customers, employees, and stakeholders in Japan.

The challenge will be to develop appropriate industrial use cases that have an impact on business while paying attention to security, accuracy, and ethics.

That said, I believe code generation is a top GenAI use case in the region. It will have a large impact on software development, web development, database management, API integration, and low-code or no-code platforms.

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