Global or local? SEA AI firms mull strategies amid client caution

AI startups in Southeast Asia are caught in a Catch-22.

Most would like to focus on local markets, where they can leverage their regional knowledge and expertise. But that means targeting a market that has become very cautious about investing in a fast-changing industry.

If they go global, they can chase clients willing to pay a premium for innovative AI solutions. But that means struggling to get noticed in a hypercompetitive market dominated by powerhouses such as Microsoft, Amazon Web Services, Meta, and Google.

Image credit: Timmy Loen

Worse, even successful Southeast Asian startups risk being overlooked by venture capitalists, who primarily focus on US and other mature markets.

Jennifer Zhang, CEO and co-founder of Wiz.ai, said many businesses in the region are very enthusiastic about AI but are slower to justify its costs, which can be significantly higher than traditional solutions.

Founded in Singapore in 2019, Wiz.ai started out by offering chatbots customized to use local dialects to call centers. The company now also focuses on fine-tuning vertical or industry-specific models for automation.

The costs that most startups struggle with are not the actual price of the software. Instead, they grapple with the associated expenses, such as training employees and upgrading infrastructure. Many businesses often have trouble quantifying the return on investment (ROI) of AI solutions, making decision-making more difficult.

This has led to fewer use cases, hindering the growth of AI in Southeast Asia, according to Zhang. Although the situation is improving, she pointed out that many clients won’t invest in the new tech without seeing use cases, which she calls the best way to convince local firms to adopt AI.

But in their pursuit of growth, some startups have also sought to tap international markets.

Global vs. local challenges

“In order for you to get big, you have to get outside where the money is,” noted Hokiman Kurniawan, co-founder and CEO of AI transcription startup Meeting.ai. He was speaking at the recent Tech in Asia Conference in Jakarta, which was held in October.

Global competition requires Southeast Asian companies to think beyond their home markets and adopt strategies that align with international standards, Kurniawan added.

Hokiman Kurniawan (center), co-founder and CEO of AI transcription startup Meeting.ai, speaking at the Tech in Asia Conference in Jakarta / Photo credit: Tech in Asia

Declining investments

Infrastructure over applications