AI is no longer a distant promise but reshaping economies across Asia Pacific (APAC).According to IDC, AI-related investments in APAC will grow 1.7x faster than overall digital technology spending, creating a $1.6 trillion economic impact by 2027.
Yet, while money is flowing fast, what looks like progress may be illusory. Networks and digital infrastructure are struggling to keep pace, with leaders identifying increasingly complex infrastructure as the top challenge to enterprise-wide AI implementation. This means AI spending in APAC could grow faster than network capacity, creating a ‘digital congestion crisis’. Without modern and scalable infrastructure, billions of dollars in AI investment risk getting stuck in traffic—delivering pilots, not productivity, and promise, not impact.
The risk is particularly pronounced in APAC due to significant differences in digital infrastructure. Cities like Singapore and Hong Kong are already leading the way, while emerging markets are strolling to catch up in infrastructure and data centre capacity. Without modern, scalable infrastructure, billions in AI investment could stall, leaving businesses across the region struggling to move from pilots to productivity.
Why legacy networks are not fit for purpose
The demands that emerging technologies such as GenAI place on network infrastructure are huge. Large language models (LLMs) which power AI tools such as Microsoft Copilot, Google’s Gemini and Open AI’s Chat-GPT as well as AI-powered chatbots and more, demand rapid data processing, secure connectivity, and ultra-low latency.
Legacy networks lack the ability to manage these demands efficiently and dynamically. Unlike AI-ready networks, which can adapt in real time, legacy systems are static and rigid. This results in inefficiencies that can limit productivity and growth gains. Our latest data shows that legacy networks can introduce operational inefficiencies of about 20 percent -25 percent. Moreover, slow systems can frustrate customers, discourage innovation, and leave businesses unable to scale operations effectively.
Security is another major concern. Legacy networks weren’t designed to handle today’s cyber threats which are often themselves AI-powered. This leaves organizations and their customers vulnerable to data breaches and hacking.
AI and the next generation of intelligent networks: the multi-lane highways of the digital economy
The rise of AI calls for dynamic networks that can optimize resource allocation and manage unpredictable traffic by constantly adapting to data demands. Just like cities today use dynamic traffic management and complex road systems, information networks need to evolve to become multi-lane information highways.
These networks should be able to handle not only vast volumes of data but be able to prioritize tasks like fraud detection, supply chain optimization, or telemedicine diagnostics, all in real time.
For instance, advanced technologies like Software-Defined Networking (SD-WAN) can optimize traffic for AI workloads and proactively detect performance issues to minimize downtime. Security frameworks such as Secure Access Service Edge (SASE) and Zero Trust allow organizations to proactively identify and respond to threats by detecting unusual network patterns. These networks use AI to optimize their performance and protect sensitive data which is crucial to the AI economy.
How AI-driven networks are transforming industries
AI is fuelling transformative changes across industries like manufacturing, retail, and financial services. For instance, manufacturers are seeing enhanced productivity through smart, AI-connected systems that predict equipment failures and boost efficiency. These changes are helping companies reduce downtime and improve their bottom line. In China, a national AI + Manufacturing roadmap is guiding the adoption of smart factories and AI-driven production, creating opportunities for both local and foreign firms to enhance efficiency and innovation.
Retail also stands to benefit immensely from AI. From hyper-personalized shopping experiences to real-time inventory management and automated warehouses, AI is unlocking new efficiencies and customer experiences. This momentum is particularly evident in Southeast Asia where e-commerce and video commerce are expanding rapidly and platform efficiencies are improving.
In financial services, AI is driving real-time fraud detection and digital onboarding. With modern, AI-driven networks, banks in Singapore are already using AI-ready networks to accelerate fraud detection, improve customer experiences and enable seamless interactions across multiple platforms.
Intelligent networks are key to enabling all these innovations and transforming industries. According to a recent Cisco report, organizations that deploy modern networks report a 43 percent increase in business and IT innovation. Moreover, our recent data indicates that this approach can reduce network operation cost by 25 percent – 30 percent.
Clearing the road for the APAC AI economy
To power an AI-driven future, the APAC must prioritize network modernization as a national imperative. This is not merely a technical upgrade. It is the foundation for economic resilience, innovation, and global competitiveness.
However, modernising networks does not have to mean starting from scratch. A phased approach can help businesses transition smoothly while minimising disruption. The first step for organizations should be assessing the current state of their networks and identifying inefficiencies. This allows them to create a clear modernization plan.
Cross-border initiatives, such as the ASEAN Power Grid and regional cloud collaborations, are helping, but gaps remain. Without coordinated infrastructure and intelligent traffic management, APAC risks a digital congestion crisis where AI spending outpaces network capacity.
From there, businesses can prioritize essential upgrades, focusing on areas such as AI-ready technologies, seamless data exchange, and advanced security solutions. By addressing specific needs in stages, enterprises can achieve meaningful progress without overwhelming their operations.
Network modernization as a business enabler
Network modernization is an investment in growth and innovation, it should not be viewed as a cost. Modern networks are the foundation for supporting new digital services and driving growth. They connect people, businesses, and applications in ways that unlock previously untapped potential. Imagine the benefits of delivering a seamless shopping experience during busy sales periods or live streaming a global sports event with zero buffering. In today’s digital world high-speed connectivity is not just a necessity but a long-term competitive advantage.
By treating information networks as a business enabler, APAC organizations can build scalable, secure, and resilient infrastructure capable of meeting the demands of the AI economy.
Hon Kit Lam is Vice President, Hybrid Connectivity Services, Tata Communications.
Hon Kit Lam is the Vice President of Hybrid Connectivity Services at Tata Communications. He is responsible for the overall product strategy and development of Enterprise Network Transformation services, which includes IZO™ Internet WAN, and IZO™ Multi Cloud Connect services, IP Transit and GVPN.
The IZO™ Multi Cloud Connect service represents an innovation and growth agenda that strives to transform the service portfolio into an on-demand, self-serve, and intelligent platform.
Lam is a Tata Communications veteran and previously served as the product owner responsible for driving the launch of the IZO™ Internet WAN network portfolio.
TNGlobal INSIDER publishes contributions relevant to entrepreneurship and innovation. You may submit your own original or published contributions subject to editorial discretion.
Featured image: Sander Weeteling on Unsplash
Why small language models may be the greener path for applied AI