Asia-Pacific tech services spending reached $7.6 billion in Q2 2026, up 50.5% year-over-year, as enterprises accelerated AI infrastructure investment across the region, according to ISG data reported by Outsource Accelerator. The growth is almost entirely concentrated in cloud and IT services, while traditional business process outsourcing contracted.
Where the Money Is Going
XaaS (anything-as-a-service) accounted for $6.6 billion of the total, growing 57%. Within that, IaaS dominated at $5.8 billion, up 59%, as enterprises build the cloud and AI infrastructure layer that precedes application deployment at scale, Outsource Accelerator reported. IT outsourcing grew 46%.
The pattern is consistent with what enterprise buyers are telling analysts globally: the current investment cycle is about building compute capacity and data infrastructure, not yet about deploying AI agents and automation tools on top of it.
“Cloud demand continues to accelerate, as enterprises seek infrastructure services to support AI adoption, while managed services is showing resilience,” Michael Gale, ISG Asia Pacific Partner and Regional Leader, told Outsource Accelerator.
The BPO Decline
Business process outsourcing ACV fell 3% year-over-year to $129 million in Q2 2026. Engineering and R&D services posted the sharpest decline at 53%, dropping to $85.5 million. The contraction is happening simultaneously with massive infrastructure growth, confirming that enterprise technology budgets are reallocating from labor-intensive service delivery to compute-intensive infrastructure.
For BPO operators, the data is a clear warning: the same enterprise buyers who are increasing tech services spend by 50% are cutting process outsourcing at the same time. The money is moving from people to infrastructure.
Regional Divergence
The growth is not uniform across APAC. Southeast Asia posted triple-digit growth. China grew nearly 100%. Japan added 21%, and Australia/New Zealand grew 12%. India, by contrast, posted a 45% decline in tech services ACV, a figure that directly parallels the valuation correction visible across listed Indian IT companies during the same period, according to Outsource Accelerator.
The H1 2026 combined market reached $14.3 billion, up 29% year-over-year, with Q2 showing acceleration over Q1.
Capital Sequencing for Agent Infrastructure
The APAC data illustrates a sequencing pattern visible globally: enterprises are investing heavily in IaaS and cloud infrastructure now, creating the compute and data layer that AI agents and automation platforms will run on next. Retail and CPG led sector growth with triple-digit increases. Healthcare, pharma, and business services each grew more than 50%.
For agent platform vendors and AI automation startups, the signal is that enterprise infrastructure procurement is running ahead of agent deployment. The buyers are building the foundation. The agent layer comes next.