Technology spending in the Asia Pacific (APAC) region, projected to expand by 6.5 percent in 2025 to reach US$722 billion, faces fresh headwinds as US-imposed tariffs threaten to inflate technology costs, disrupt global supply chains, and dampen IT investments.
While Forrester’s initial outlook echoed the resilience seen in previous years, the escalating trade tensions now inject a layer of uncertainty, with growth forecasts likely to soften by 1 to 2 percentage points.
Tariffs as a Wildcard: Sectoral and Geopolitical Implications
Forrester’s revised outlook on tech spending reflects the uneven exposure of APAC markets to these tariffs. Countries deeply integrated into global hardware supply chains, such as China and Vietnam, may face higher risk of disruption, while others with more diversified or service-oriented IT sectors, like India and Australia, may navigate these challenges better.
The software and IT services segments, particularly AI and cloud services, remain bright spots. Forrester projects 10.4 percent growth in software spending and 6 percent in IT services for 2025 — driven by AI adoption, cloud migration, and rising cybersecurity needs. Notably, Southeast Asian economies — such as Indonesia, the Philippines, and Vietnam — continue to lead in growth, underpinned by government digitalization drives and cybersecurity investments.
However, the tariff ripple effects could alter spending patterns. For example:
Hardware procurement costs may spike.
Project timelines could be delayed.
Businesses may re-prioritize IT budgets to manage risks, slowing non-essential spending.
Country-Level Outlook: Winners and Cautions
Forrester’s optimistic country forecasts highlight varied dynamics:
India (11 percent growth) and Vietnam (10 percent) remain standouts, propelled by strong enterprise demand, digital policy frameworks, and venture capital flows. Yet, both are vulnerable to tariff-induced supply chain shocks, which could temper these gains.
Australia (6.6 percent) and China (7.7 percent) show robust demand, driven by cybersecurity, AI, and cloud solutions. In China, government policies aimed at tech self-reliance will likely mitigate some trade-related challenges.
Singapore (5.6 percent) and Southeast Asia overall continue their steady digital march, though regulatory compliance and cybersecurity pressures may shape spending choices.
Strategic Imperatives: Adaptability Over Optimism
The Forrester analysis serves as a timely reminder that while long-term drivers of APAC’s tech market — AI, cloud, and digital infrastructure — remain solid, the pace, prioritization, and funding of projects will need to adjust.
As Frederic Giron, Forrester VP, notes, scenario planning and resilience-focused strategies will be essential for tech leaders to navigate tariff volatility, geopolitical risks, and macroeconomic pressures.
In summary, APAC’s tech growth story is far from over, but the road ahead is now marked by greater caution. Companies that can pivot fast, reassess risk, and double down on digital resilience will be best positioned to thrive in this evolving landscape.
Meanwhile, Forrester’s latest analysis prepare by Principal Analyst Biswajeet Mahapatra highlights a significant shift in the Asia Pacific region’s technology industry: APAC is no longer just following global trends — it’s leading innovation across several emerging technology domains.
Key findings:
Humanoid Robotics: Japan and South Korea are global leaders, with lifelike robots deployed in hotels, hospitals, and retail.
Quantum Communication: China has operational quantum networks in cities like Beijing and Shanghai.
Multilingual Generative AI: India is creating foundational language models for its 22 official languages, pushing the boundaries of AI localization.
Smart Cities: Singapore is at the forefront with AI-driven urban planning and edge-powered infrastructure.
Emerging Technology Trends Across APAC:
Generative AI (GenAI): Used for content generation, localization, visual asset creation, and code development. Examples include AI-generated anime in Japan, hyperlocalized marketing in South Korea, and personalized e-commerce content in China.
Agentic AI: Systems that make autonomous decisions and adapt in real time. Applications include financial portfolio management in Australia, dynamic logistics in India, and smart campus solutions for energy and services optimization.
IoT Security: As IoT adoption grows, so does the focus on cybersecurity. Singapore, South Korea, Vietnam, and Thailand are investing in threat detection, Zero Trust architectures, and edge security for smart infrastructure and industrial IoT.
Synthetic Data: To overcome data privacy and access issues, synthetic data is increasingly used to train AI models. China and India lead in public-private sandboxes, while Japan explores synthetic patient data for healthcare AI.
Baburajan Kizhakedath
