AI momentum builds across Southeast Asia, but gaps persist

Southeast Asia is accelerating into the AI era, but many organisations are still struggling to translate adoption into measurable business value, according to a new report by McKinsey & Company.

The report, "AI in Southeast Asia: An era of opportunity", finds that 88% of companies globally now use AI in at least one business function, up from 78% a year earlier.

In Southeast Asia, nearly half of organisations have moved beyond pilot stages, placing the region slightly ahead of the global average, though still trailing more mature markets such as the US.

Within the region, Singapore leads with 56% of companies at or beyond scaling, followed by Indonesia at 51%.

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The opportunity is underpinned by strong fundamentals. Southeast Asia’s young population, high mobile penetration, and openness to technology position it as fertile ground for AI adoption. Around 70% of the population views AI as a societal benefit, significantly higher than in markets such as Japan and the US.

At the same time, global players including Amazon Web Services, Google, Microsoft, Alibaba Cloud and Tencent Cloud have committed more than US$50 billion to infrastructure across the region.

As McKinsey partner Vivek Lath said, “The narrative in Southeast Asia is rapidly moving from experimentation to enterprise-wide scaling,” with organisations now focused on embedding AI into core processes to drive competitive advantage.

Yet a gap remains between investment and returns. More than six in ten organisations are allocating between 11% and 40% of their technology budgets to AI, but around 60% report less than a 5% impact on EBIT, while nearly one in five see no financial impact at all.

For marketers, this reflects a familiar challenge: rising investment in AI-driven campaigns, personalisation and martech stacks, but ongoing difficulty in clearly attributing ROI and linking AI initiatives to revenue outcomes.

While executives cite improvements in innovation, customer satisfaction and efficiency, turning these into measurable financial gains remains a key hurdle.

Talent shortages, unclear ROI and integration complexity continue to be the biggest barriers, with one in five executives identifying talent as the primary constraint.

Scale is also a defining factor. Among companies with revenues above US$250 million, 56% have reached scaling or fully scaled AI adoption, compared to 47% of mid-sized firms and 42% of smaller businesses. Industries such as technology, media and telecommunications are leading adoption, while sectors including healthcare and public services remain largely in experimentation phases.

The implications are particularly significant for MSMEs, which make up 97% to 99% of businesses in the region. Without accessible and affordable AI tools, the report warns that smaller players risk falling further behind larger enterprises that can invest at scale.

Looking ahead, the emergence of agentic AI signals the next phase of development. While adoption is currently concentrated in technical functions such as IT and software engineering, externally facing areas— including sales and marketing, product development, and customer engagement— are moving cautiously.

Notably, only around one in five companies are scaling agentic AI in sales, marketing and customer engagement, reflecting the higher reputational and commercial risks associated with customer-facing automation.

However, momentum is building, with nearly nine in ten organisations planning to experiment with AI agents in the coming year.

Ultimately, McKinsey identifies a small group of high performers, about 6% globally, that are capturing significant value from AI, contributing 11% or more to EBIT (earnings before interest and taxes). These organisations share a common approach: treating AI as a core driver of business transformation rather than a series of isolated pilots.

As associate partner Saurish Basu put it, “The winners will be those who are able to reimagine their business and workflows, rather than purely using AI to digitize existing processes.”

In another recent report by Bain & Company, more B2B companies are falling short of revenue expectations despite rising confidence and aggressive growth targets.

The consultancy’s latest "B2B Growth Agenda" report, based on a survey of more than 1,100 global senior executives across 18 industries, points to a widening disconnect between ambition and execution as firms grapple with AI disruption and geopolitical uncertainty.

While 86% of executives expected to meet their growth targets in 2025, 42% ultimately missed them – up from 32% the year before. Yet confidence remains high, with 91% of leaders expecting to hit their 2026 goals and projecting revenue growth rates 20% higher than last year.

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