AI Demand Lifts Asia Pacific Tech Services Spending to Record in Q3
The Asia Pacific ISG Index reported record third-quarter spending on technology services, with combined market annual contract value rising 80% to $10 billion. Cloud-based services grew 92% to $9 billion, while managed services increased 16%. ISG now expects global cloud-services growth to be twice its previous forecast, though its managed-services outlook is unchanged.
The Asia Pacific ISG Index tracks commercial outsourcing deals worth at least $5 million in yearly contract value. In Q3, combined spending hit $10.0 billion, an 80% jump and the first quarter at that level. Cloud-based services reached $9.0 billion, up 92%, the fastest since 2018.
Within cloud, infrastructure services nearly doubled to $8.3 billion, while software services rose 37% to $681 million. Managed services exceeded $1 billion for a second straight quarter, up 16%. IT outsourcing gained 41%, business process outsourcing surged 281%, and engineering services fell 82%. Fifty-five managed contracts were awarded, down 8%.
The AI-driven spending surge could speed digital transformation across Asia Pacific, affecting technology workers, outsourcing employees, and businesses adopting cloud tools. Demand may shift toward AI and infrastructure skills while some software engineering roles face pressure. Companies could gain efficiency and launch new services, though smaller firms and less-invested markets may struggle to keep pace. Consumers might benefit from faster, more capable digital services, but access and affordability could remain uneven.