APAC continues to focus on growth, as tariffs creep in

“In Asia Pacific, nobody's clear as to what the impact of tariffs is or whether it will really play out in their countries or not. It's a different scenario in US, where it's a clear signal that there will be some impact,” says Jaideep Malhotra, President of Tech Data TD SYNNEX, Asia Pacific and Japan.

The month of April probably caused a lot of panic to tech vendors and partners globally as the US announced reciprocal tariffs. Since then, there have been lots of uncertainties about tariffs, but the reality is most vendors and distributors are already looking at how they can best manage the situation.

For Tech Data TD SYNNEX, it's still business as usual in Asia Pacific for now. In a conversation with CRN Asia, Jaideep Malhotra, President of Tech Data TD SYNNEX, Asia Pacific and Japan explained that the tariff situation is slowly creeping into the minds of partners and customers.

“To be frank, nobody knows because things are changing every day, every week, as we are talking. And we will see when it settles down, finally, what the impact is. But certainly, there is uncertainty,” said Malhotra.

Looking at the Asian region, Malhotra stated the region has a robust demand economy that is experiencing growth that is led by infrastructure deployments and consumption. However, Malhotra also believes that it is too early to state that region will not be impacted.

According to Malhotra, Tech Data experienced double digit growth in the Asia Pacific region in the first quarter of the year, with a secular trend across markets whereby high growth technologies are leading the way.

The PC refresh cycle in particular has been good for Tech Data, with some countries leading the way that others. Japan in particular has recorded a high uptick in the PC refresh cycle. Malhotra believes this is because Japan usually is the first one to follow the refresh timelines and are very disciplined about it.

“We also see that the AI PCs as a percentage of PC sales have started to creep up. And that's a good sign. It’s a sign of more awareness and also a sign that AI PCs are becoming affordable at a price point that is reasonable. Secularly, the consumer is faring a little better as well, which was not doing so earlier. So, across the board, there is growth, and there is refresh, but certain countries are leading other countries. And it's a matter of time that the countries will catch up on that,” explained Malhotra.

When asked if the tariffs could see an increased demand for PCs, Malhotra mentioned that partners in the region have not been requesting more devices.

“In Asia Pacific, nobody's clear as to what the impact of tariffs is or whether it will really play out in their countries or not. It's a different scenario in the US, where it's a clear signal that there will be some impact. So, the demand signals there could be very different than what demand signals are in this region. We don't see partners pulling in and asking for more than the normal seasonality or the refresh supported kind of growth rates,” said Malhotra.

Emerging technologies in the region

Looking at growth in the region, Malhotra highlighted that apart from AI being on the agenda for businesses in the region, cybersecurity has also gotten a foothold in every enterprise and business as well.

“Security has become the technology where everybody needs to really protect their data, their environment and their IP. And cybersecurity technologies are really experiencing very high growth. The other area we see growth is obviously with cloud hyperscalers. Having said that, the world is going to be a hybrid cloud. We see some demand coming back to on-premises as well,” explained Malhotra.

On the data center front, Malhotra said that AI data centers are dominating the sector.

“Nobody talks about anything except AI data centers, which is a very different go-to-market motion. We see a lot of attraction in data practices of our partners because without data practice, it is very hard to build an AI practice. And so that is another theme that is emerging. So, we see cybersecurity, cloud, data, and software is growing thanks to non-application software going through the channel much more than direct, which is good,” added Malhotra.

As businesses look to embrace AI, Malhotra pointed out that organizations are realizing that to build an AI practice, they first need clean and good data that can be governed.

“Think about it this way, if you have private data that is in good shape, and you apply a public AI model or element on it, you create a private AI. The data is a foundation. Most of the organizations are really focused on getting their data practices in order, be it their data lakes, data foundations, organizing the data, securing the data, it's all linked to that,” said Malhotra.

Moreover, the interest in agentic AI is also pushing the growth with businesses looking at how they can take agentic AI for workloads in customer service. The data management capabilities will be core for agentic AI.

Destination AI

Given the projected growth for AI and other emerging technologies in the region, Tech Data wants to ensure its partners are capable of delivering the best products and services to customers.

This is where Destination AI comes in. Destination AI is Tech Data TD SYNNEX’s end-to-end program supporting partners journey in creating, enabling and growing their AI practice. With a comprehensive framework, Destination AI empowers partners to unlock new opportunities and gain a competitive edge.

“The genesis of Destination AI is a result of our value added selling the specialty model. Our goal in the channel ecosystem is to enable our partners to grow. We help our partners identify the new technologies, enable and support them on those technologies, and if required, give resources on those technologies so that they can drive the business outcome for their customers, which are starting to embed AI into their thinking and the processes,” explained Malhotra.

For Malhotra, it's a whole journey that is focused on helping partners grow. The best way to do that is through enabling them to learn new technologies, which they will then take to their customers and showcase to them.

Preparing for the future

As conversations on tariffs are expected to only intensify in the weeks to come, the partner ecosystem in Asia Pacific will want to be prepared to deal with any changes and hope the impact will be minimal.

For Malhotra, the nature and the profile of the partners are changing. He believes this is happening because the complexity of technologies is so high that the partners need to really think about how they get on this journey of selling or orchestrating high-growth technologies.

“When we conducted our Direction of Technology Report last year, which is a TD SYNNEX survey to our partner base, it was very clear that the partner's mindset is shifting, and they are really investing their time, energy and resources around high-growth technologies. But it's complex. Resources are scarce, skills are limited, capabilities need to be developed,” explained Malhotra.

As such, Malhotra believes partners need to keep building on that and leverage distributors like TD SYNNEX and Tech Data who can help them get enabled, who can help them support on this complex technologies, help them provide resources with programs and really take them along this journey because the partner of the future is very different than the partner of today.

“The partner of the future is somebody which can really be a one-stop shop for their customers in their digital transformation and different motions, consumption, subscription, being able to bring and work within the ecosystem to take the solutions to the end customer,” said Malhotra.

In the past, Malhotra pointed out that the partner ecosystem was a very linear motion. A vendor will produce a technology; a distributor will resell it and the partner would add services and just sell that technology to the customer. Today, Malhotra says it takes seven ecosystem players to be able to deliver a solution to the end customer.

“Both distributors and partners are at the center of that ecosystem. So, the ability to orchestrate, collaborate, be a one-stop shop to the customer in their digital transformation journey is the partner of the future. It needs a very different kind of skills to be able to leverage, collaborate and invest in what they can, to solve the complexity in the technology ecosystem,” concluded Malhotra.