AI uptake accelerates in APAC as ANZ firms face skills shortage
Organisations in Australia and New Zealand are reporting early business gains from artificial intelligence (AI), but significant challenges remain, especially in bridging skills gaps across sectors, according to new research commissioned by Dell Technologies and NVIDIA.
AI adoption trends across APAC
The IDC analysis, based on surveys across Asia Pacific (APAC), found a rapid acceleration of AI, generative AI (GenAI), and machine learning (ML) adoption in the region. APAC's AI-centric server market is forecast to reach AUD$366 billion by 2025, with 21% of organisations in Australia and New Zealand (ANZ) noting measurable improvements from AI and ML deployments. Furthermore, 5% of ANZ businesses identified AI as central to their competitiveness.
Spending on GenAI is also gaining momentum. This year, 84% of APAC organisations are expected to allocate between AUD$1.5 to $3 million for GenAI initiatives. Across APAC, 38% of AI budgets are devoted to GenAI, higher than the global average of 33%. Despite the optimism, businesses face difficulties aligning AI initiatives with strategic goals and integrating AI with existing workflows.
Deployment strategies and challenges
Deployment strategies are evolving, with public cloud (including multicloud) leading in 2024. However, there is rising demand for private and on-premises AI deployments, driven by security, cost efficiency, data sharing, collaboration, and industry-specific needs. Organisations are increasingly adopting specialised AI models and focusing on data security and infrastructure choices across cloud environments.
Key challenges for scaling AI and GenAI include rising IT costs, regulatory and compliance risks, and meeting energy efficiency commitments. Skills shortages are cited by over 72% of APAC enterprises as a significant concern, leading to delays in digital transformation and product development. Security and privacy remain critical considerations, with organisations turning to external service providers for support in AI system security, infrastructure modernisation, and workforce training.
Approaches to AI adoption
The report notes that APAC organisations are generally following a structured, phased approach to AI adoption, targeting high-impact use cases to deliver measurable benefits while mitigating risks. Priorities include investing in suitable infrastructure, fostering AI-centric teams, aligning AI strategies with business goals, and implementing robust data governance frameworks.
Australian and New Zealand businesses are placing increasing reliance on external experts to tackle skills shortages and build scalable infrastructure. Across APAC, 60% of businesses rely on external developers for AI applications, with 30% developing AI in-house and 10% using commercial off-the-shelf solutions. Partnerships with technology providers have become essential for roadmap development, infrastructure support, implementation, and workforce development.
AI uptake across key industries
Banks and financial services are leading AI adoption in APAC, with 84% using AI and 67% deploying GenAI, often to enhance fraud detection, anti-money laundering, and operational efficiency. Financial services spending on AI and GenAI is projected to grow at a compound annual rate of 25-31% from 2023 to 2028. A majority of banks prefer composing AI solutions using enterprise platforms, which requires ongoing expert support in security and data management.
In manufacturing, 78% of companies are using AI, with 54% adopting GenAI for supply chain optimisation, predictive maintenance, and real-time production monitoring. Half of manufacturers prefer tailored AI solutions, focusing on areas such as manufacturing execution systems, supply chain integration, and workforce upskilling.
The energy sector is leveraging AI (83%) and GenAI (73%) for grid optimisation, predictive maintenance, and energy distribution. Australian engineering firm Worley has begun deploying generative solutions to enhance efficiency and collaboration. Investments are being made in responsible AI practices and infrastructure to promote the transition to cleaner energy and improve grid management across the region.
Healthcare organisations report 86% adoption of AI and 59% adoption of GenAI, with a focus on diagnostics and predictive analytics. Notably, CSIRO's Virga computer cluster is being used in partnership with Queensland Children's Hospital to train AI models for diagnosing cystic fibrosis in paediatric patients. Over half of regional healthcare organisations prefer composed AI solutions, often turning to vendors to address complexities around regulations and skills shortages.
Retailers in APAC are using AI (82%) and GenAI (63%) for personalisation, inventory planning, dynamic pricing, and fraud prevention. Around 43% prefer composed AI solutions. Retailers report challenges with data readiness and talent availability, prompting a combination of internal capability building and reliance on outside vendors.
Expert perspective
"The Asia Pacific region holds immense potential to lead the way in AI adoption and innovation. Now is the time for enterprises to move beyond proof of concept (POC) and focus on achieving measurable return on investment (ROI)," said Chris Kelly, Senior Vice President, Infrastructure Solutions Group Specialty Sales, APJC, Dell Technologies. "The journey to consistent ROI is complex and requires comprehensive support across every stage - strategy, use case development, data preparation, governance, optimisation, and scaling AI implementations. With the support from technology partners, enterprises can overcome adoption challenges and accelerate their path to impactful, results-driven AI outcomes."
Research methodology
The findings reflect multiple IDC data sources and surveys conducted between August 2023 and August 2024, spanning up to 919 respondents from various industries throughout APAC. The research highlights both opportunities and ongoing barriers as companies use AI and GenAI to drive productivity, efficiency, and new business models across the region.
