Skills gap and talent retention still a top challenge for channel partners in APAC

While tariffs and geopolitics remain a concern, the ability to retain and continuously upskill talent is a top challenge for channel partners in APAC, according to study by The Channel Company Data and Research team.

The first half of 2025 continues to be a challenging time for channel partners in APAC. Not only have they had to deal with uncertainties from geopolitics in the region and the impact of reciprocal tariffs announced by the Trump administration, a study by The Channel Company Data and Research team revealed that skills gap and talent retention remain a top challenge for channel partners in the region.

The study, which includes responses from 84 senior IT vendor representatives primarily located in the APAC region, also highlighted the strategic priorities channel partners have in the region for the year. According to the study, 30% of the respondents believe the rapid evolution of technologies, particularly AI and cybersecurity, has exposed critical shortages in engineering and consulting expertise.

As such, the ability to retain and continuously upskill talent is a top challenge. While partners and vendors continue to invest in training and upskilling their teams, the reality is, the competitive demand for talent in the region is making it increasingly difficult for channel partners to retain their talent.

“Despite these strategic opportunities, challenges—particularly the skills gap and competitive margin pressures—pose significant risks. Channel partners must navigate these obstacles by investing in workforce development and by shifting to service-oriented business models that support recurring revenue. The alignment between strategic priorities and operational goals suggests that a concentrated focus on technical expertise, managed services expansion, and customer success will be essential for sustaining competitive advantage,” the report stated.

Apart from that, the study also revealed intense competition from hyperscalers and the commoditization of products pressure margins, necessitating a shift toward higher-margin, value-added services. Customers are also increasingly demanding comprehensive, outcome-based solutions that incorporate AI, flexible consumption models, and multi-vendor integrations.

This is where the conversation on ROI also comes in. Customers want real value from their ROI. While channel partners and vendors continue to define long term ROI, 15% of channel partners surveyed see inflation, currency volatility, and geopolitical tensions complicate purchasing decisions, making ROI articulation more critical than ever.

Aligning strategic priorities and goals

Given the increasing demand for AI, partners in the region remained focused on enhancing their capabilities in delivering this to customers. As vendors view AI as a critical differentiator, channel partners are mandated to not only resell, but also implement value-driven, AI-enabled solutions.

For example, in Southeast Asia, some partners are co-investing with vendors to develop use cases and proof-of-concepts for customers to trial AI use cases. Southeast Asia has also witnessed increased investments in AI innovation centers by vendors that enable partners to come in and showcase to clients and also work with them to co-create AI solutions that meet their needs.

At the same time, as vendors realign their partner programs to emphasize channel-led sales and end-to-end ecosystem solutions, the move toward a partner-first mindset is seen as foundational for scaling in an increasingly collaborative environment. There is also a significant pivot from traditional on-premises sales to recurring revenue models. Partners are challenged to adapt operational processes to support SaaS and subscription-based offerings.

As such, channel partners are articulating their strategic goals for the year. Undoubtedly, most channel partners will emphasize deep technical training in emerging areas, especially with the soaring demand not just for GenAI, but also increasing demand for cybersecurity and cloud services.

Partners will also look to transition to recurring revenue streams through managed services, including MSSP and AI consulting. The study also revealed that 20% of partners are aiming to carve out niche specializations for vertical-specific solutions and develop proprietary offerings to distinguish themselves.

There will also be more focus on customer success and retention, especially with the rise of subscription models, which has made strategies to drive renewals and long-term customer engagement central. Channel partners will also look to leverage co-marketing initiatives, digital campaigns, and vendor-provided market development funds (MDF) is critical for reaching new prospects.

In conclusion, as the market moves towards rapid technological change and increasing operational complexity, investing in technical upskilling and managed service capabilities will be critical for channel partners striving to deliver integrated, high-value solutions.