AI and cloud to reshape IT services as partners shift to strategic roles: Forrester
Demand for modernisation is seeing partners evolve from technology implementors into advisors.
Cloud and generative AI projects are set to transform the IT services market, with businesses seeking scalable AI, stronger data governance and partnerships to fuel innovation, according to Forrester.
The research firm predicts global IT services spending will grow at a 4.8 per cent compound annual growth rate (CAGR) from 2024 to 2029.
In the Asia-Pacific (APAC) region, IT spending is going into cloud and AI-augmented software, IT services, including cybersecurity, integration and legacy modernisation, and AI-related services.
“APAC spending is less about ‘net new infrastructure’ and more about software, cloud platforms and services that operationalise AI and digital transformation at scale,” said Ashutosh Sharma, VP and principal analyst, Forrester.
For partners and IT service providers, it will reshape customer engagements — shifting services, modes of delivery and pricing models, Sharma said.
The services mix is expected to move from traditional managed services toward AI‑enabled transformation, data engineering and cloud optimisation to 2029.
Delivery models are diversifying, with global delivery combined with local expertise to address regulatory, language and industry‑specific needs.
Pricing models are also shifting away from time‑and‑materials toward outcome, platform and consumption pricing, particularly for AI and cloud optimisation engagements.
“Channel partners increasingly need to act as solution integrators and transformation advisors, not just resellers or implementers,” Sharma told CRN Australia.
Regional modernisation reshapes partner playbook
Across the Asia-Pacific region (APAC), organisations are investing in software, cloud platforms and services that operationalise AI and digital transformation at scale, according to Forrester.
“Transformation is services‑led early in the lifecycle,” Sharma noted.
In practice, this means organisations are tapping service providers at the design stage and then engaging all the way through to integration and operations, rather than building everything in‑house.
The region is also aggressively adopting AI, driven from the leadership level, with partners playing a critical role in executing projects across the full lifecycle. When selecting partners, regional organisations prioritise speed, competitive differentiation and business impact, according to Forrester’s research.
Overall, service providers will need to coordinate business, operations and IT stakeholders, lead innovation conversations and offer a full suite of data, content and software solutions.
Sharma distills key criteria for partners in APAC:
- Lead with AI and cloud platforms, not legacy service lines.
- Localise delivery and governance, especially around data sovereignty and regulatory complexity.
- Demonstrate business outcomes, not just technical capability, as APAC enterprises demand measurable ROI from AI investments.
- Invest in workforce transformation, including AI literacy and industry‑specific expertise, to match the region’s rapid adoption curve.
“Providers that remain infrastructure‑centric or slow to adapt their delivery and pricing models are likely to fall behind as AI‑ and cloud‑led transformation accelerates,” he said.
Industry demand drives modernisation projects
Across the region, there’s strong demand for industry-specific solutions for sectors like financial services, manufacturing, energy and the public sector, according to Forrester.
Financial services, government and regulated industries are driving the demand for data sovereignty and compliance, with a growing need for hybrid and sovereign cloud architectures to manage regulatory complexity.
Banking and insurance sectors are undertaking tech modernisation initiatives to manage regulatory compliance and tech obsolescence. Defence and public sector projects in Australia and Singapore are exploring genAI for operational efficiency and decision-making.
“Service providers are evolving into strategic co-innovation partners, with trust becoming a paramount selection criterion,” Sharma said.