IDC: SMBs to adjust IT budgets to drive GenAI adoption by 2027

IDC believes GenAI will reshape SMBs in APAC as they look to drive innovation, cybersecurity investments, and cloud adoption to enhance competitiveness by 2027.

From DeepSeek to Grok, businesses are now having a variety of AI models they can choose to work on to achieve better productivity and efficiency. Despite concerns on data privacy and security, AI spending is also not showing signs of slowing down, especially in the Asia Pacic region.

One segment of enterprises that have shown an increasing interest in working with AI are the small and medium businesses (SMBs). Unlike large enterprises, SMBs need to be careful in how they allocate their budget towards their AI investments.

Interestingly, according to a recent IDC report, 50% of SMBs will significantly adjust their IT budgets to factor in AI as the technology improves by 2027. The IDC FutureScape: Worldwide Small and Medium-Sized Business 2025 Predictions — Asia/Pacific (Excluding Japan) Implications also revealed that vendors will look to solidify their AI pricing strategies as they look to make the most of the market opportunities with SMBs.

SMBs and midmarket companies understand that AI is essential to compete. This is clearly indicated in the report with 65% of midmarket companies in the APAC region agreeing that GenAI is a new corporate workload. In 2025, 53% of such companies plan to spend up to US$1 million on GenAI-related spending.

Areas that SMBs and midmarkets are looking to see GenAI make a difference is in enterprise resource planning (ERP) or ecommerce. Both these areas will require an incremental increase in technology spending in the upcoming years.

As such, AI is now a game changer for SMBs and midmarket companies embracing digitalization as they look to drive efficiency and innovation at an unprecedented scale. IDC believes that these businesses no longer see AI as a “nice-to-have,” but rather an essential tool for businesses of all sizes to remain competitive in the evolving digital landscape.

Given that SMBs and midmarkets may not have sufficient skillsets to work with AI, IDC predicts that AI-as-a-Service (AIaaS) providers will continue to innovate, delivering tailored solutions for SMBs. The increasing availability of AI with pretrained models will only drive more success for SMBs as they look to have better access to the technology.

According to Supriya Deka, research manager, SMB, Midmarket, and Digital-Native Business Program, IDC Asia/Pacific, 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, optimizing 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,” said Deka.

SMBs want to embrace AI

Taking a deeper look into the report, IDC stated that 70% of APAC-based SMBs will demand clear use cases from vendors or managed service providers (MSP) marketing AI capabilities before they invest in and implement new AI/GenAI technologies by 2025. This clearly indicates that SMBs have an idea of what they need but also want to make sure they are not investing blindly and have a well-planned strategy in place with the vendor or MSP.

As such, in 2025, 30% of SMBs will look to tactical AI use cases and investments that break the correlation between business expansion and headcount growth. SMBs will want to ensure they can mitigate internal skills shortages, and this is where MSPs and AIaaS providers will have the opportunity to share their capabilities as well.

IDC also predicts that by 2026, AIaaS technology vendors in APJ will provide dedicated SMB solutions with pretrained models, limiting their need for heavy investments in dedicated infrastructure.

Currently, the most popular pretrained models are from Google, OpenAI, Meta, Antropic, DeepSeek, just to name a few. These models are becoming widely used for tasks like natural language processing, text generation, and image classification depending on the model's specialization.

With AI in cybersecurity seemingly the best way to manage cybersecurity, IDC believes that by 2027, 35% of APAC-based SMBs will deploy sophisticated, AI-enabled cybersecurity solutions, including endpoint and network security solutions. This is not only to manage the shortage of skills in cybersecurity but also manage and detect the increasing number of sophisticated cyberattacks as well.