AI will shape the business agenda in the APAC region next year

Get ready for some big changes in the APAC business landscape in 2025! AI-driven initiatives will be the driving force behind technological improvements for companies in the region. After spending more than a year piloting and experimenting with generative AI in 2024, businesses will face the harsh reality of region-specific challenges. Prepare for tighter AI and data privacy regulations, limited data and analytics capabilities, and ever-evolving customer demands.

Leading companies are already scrutinizing their digital investments and working hard to improve their performance through targeted data and AI investments. They know that the key to success lies in embracing technology and staying ahead of the game. And they are not alone in this journey. With a combination of strong technical expertise, increased technology spending and regional technology providers offering customized solutions, APAC business leaders will be able to meet the demands of both regulators and customers.

With all that in mind, this year’s predictions for APAC are a culmination of the changes organizations will make in their value chains to win in the coming era of AI:

Sixty percent of APAC firms will localize AI using regionally trained language models.

In 2025, AI innovation strategies in the APAC region will be reshaped by different customer needs, regulatory challenges and language barriers. We believe that 60% of companies and governments in large markets such as India and China will integrate locally developed large language models with global ones, targeting sectors such as finance, education and healthcare. In contrast to the US focus on public cloud, 90% of large enterprises in Greater China will favor a hybrid strategy with private cloud. Geopolitical tensions will further drive regional AI investment, while local AI chipsets will power over 5% of AI computing in China, increasing the technology’s self-sufficiency.

A common AI legislative framework for the whole of APAC will remain a distant dream.

The Asia-Pacific region shows a fragmented landscape for AI legislation, in contrast to the EU’s unified approach. Although many countries share key principles such as the protection of citizens and data privacy, their implementation varies widely. For example, Singapore promotes responsible AI with mature guidelines, while China focuses on laws against algorithmic misconduct. India uses existing criminal laws for similar matters. While initiatives such as the ASEAN Guide to AI Governance and Ethics are emerging, they are still in their early stages and require APAC organizations to invest in each country’s regulatory compliance as AI adoption expands.

One in five APAC companies will make digital performance measurement a top priority.

Data from Forrester’s 2024 survey reveals that only 38% of digital decision makers use KPIs to evaluate digital initiatives. Despite strong digital budgets for 2025, many APAC firms struggle to connect various metrics to financial KPIs. To bridge this gap, leading companies will invest in intelligence measurement technologies and establish cross-functional working groups to improve measurement practices. However, digital leaders should be wary of genAI dashboard solutions, as vendors often underestimate the complexity involved in data integration and analysis.

Download the free Forrester Prediction Guidecovering more of our top predictions for 2025. Get additional free resources, including webinars, at Predictions 2025. center.

This post was written by Vice President, Director of Research Ashutosh Sharma and originally appeared here.