50% of small medium businesses will adjust IT budgets for AI by 2027

IDC highlights key predictions that AI, automation, and digital transformation will reshape SMBs in Asia/Pacific driving innovation, cybersecurity investments, and cloud adoption to enhance competitiveness by 2027

According to the IDC report, IDC FutureScape: Worldwide Small and Medium-Sized Business 2025 Predictions — Asia/Pacific (Excluding Japan) Implications, by 2027, 50% of SMBs will significantly adjust their IT budgets to factor in AI as the technology improves, vendors solidify their AI pricing strategies, and as AI becomes essential to compete.

Our latest Future Enterprise Resiliency and Spending (FERS) Survey results shows that 65% of midmarket companies in the Asia/Pacific region agree that AI/GenAI is a new corporate workload, such as enterprise resource planning (ERP) or ecommerce, that will require an incremental increase in technology spending in the upcoming years. In 2025, 53% of such companies plan to spend up to US$1 million on GenAI-related spending.

For SMBs and midmarket companies embracing digitalization, AI has become a game changer, driving efficiency and innovation at an unprecedented scale. No longer a “nice-to-have,” AI is now essential for businesses of all sizes to remain competitive in the evolving digital landscape.

IDC’s predictions show that AI-as-a-Service (AIaaS) providers will continue to innovate, delivering tailored solutions for SMBs. The growth of accessible AI with pretrained models will be a key driver of SMB success, enabling new opportunities for innovation and efficiency. Below are some of the other key AI-driven predictions for the region:

Demand for AI Use Cases: By 2025, 70% of APEJ-based SMBs will demand clear use cases from vendors or managed service providers marketing AI capabilities before they invest in and implement new AI/GenAI technologies

AI Investments Impact Hiring: During 2025, 30% of SMBs will prioritise tactical AI use cases and investments that break the correlation between business expansion and headcount growth and help them mitigate internal skills shortages.

SMB-Focused AI Solutions: By 2026, 80% of AI-as-a-service technology vendors in APEJ will provide dedicated SMB solutions with pretrained models, limiting their need for heavy investments in dedicated infrastructure.

Cybersecurity Investments Contradict Sentiment: By 2027, due to an increase in cyberattacks, 35% of APEJ-based SMBs will deploy sophisticated, AI-enabled cybersecurity solutions, including endpoint and network security solutions.

“Technologies like AI, cloud, and security are reshaping business operations, and SMBs must strategically invest in innovations that drive growth and resilience. AI in particular is no longer a luxury—it’s a necessity. It is emerging as a key enabler, transforming workflows, optimising decision-making, and unlocking new opportunities. SMBs that align their long-term technology roadmap with their business goals will gain a significant edge in the digital economy,” says IDC Asia/Pacific research manager, SMB, Midmarket, and Digital-Native Business Program Supriya Deka.

Each year, IDC releases its top technology predictions at worldwide, regional and country levels through its IDC FutureScape Reports  and offers strategic and data-driven insights into what is ahead for the rapidly changing IT industry. These predictions have been used to shape the strategies and business objectives of technology leaders and business executives in the next 1-5 years. All the predictions stated here cover Asia/Pacific implications.

Asia/Pacific Excluding Japan FutureScape Reports come with a complimentary report that provides specific recommendations for tech vendor sales and marketing leaders.