Digital transformation is not only a challenge for enterprises-IT service providers also relate to it.
Companies are demanding a diversified and broader IT consulting portfolio from their IT service providers. To digitalize customer interfaces, firms often require creative and digital competencies. The top companies move to combine multiple smaller projects to one large one, to extract economies of scale and get the best deal for IT services from a single source. This minimizes the project complexity, making it easier to control. Furthermore, IT service providers can digitally innovate new business models and offer customers new prototypes.
Most customers want to leverage agile methods of delivery, but these demand providers to educate and train their employees. For the IT outsourcing market, providers like Microsoft, AWS, and Google have positioned themselves with public cloud infrastructure services. Therefore, the IT outsourcing providers are experiencing a disruption of their traditional business model. With the “Cloud First” strategies becoming popular, significant companies, customers, IT service providers are dropping traditional implementation and customization projects.
IT service providers face digitalization issues in many areas of business with the new customer demands to bring in new requirements and change.
Organization -Employees have to work across departments. Furthermore, IT service providers look forward to partnerships and M&A to be able to provide E2E services.
Personnel- IT service providers need to develop new processes for selecting digitally skilled candidates.
Delivery-Providers need to scale further their offer to remain competitive.
Customer acquisition- For new customer acquisition, providers have to position themselves as c innovators.
Technology know-how-IT service providers need to focus and increasingly invest in technology partnerships in cloud solutions to enhance delivery capabilities.
IT service providers need to realize these changes and adapt to them soon to remain competitive. Transformation services focused on digitalizing customer interfaces, developing a new customer journey with upgraded digital products have become urgent. Customers do not prefer standalone solutions anymore. Therefore, IT service providers not only need to understand the customer requirements but also develop sustainable solutions for them. To be able to do that, they need customer experiences service competencies, like idea development, digital consulting, data analytics, and process optimization.
According to the Luenendonk survey:
- 92% of interviewed executive managers agree that they expect their employees to deliver digital customer experience services with a customer-centric business model. Digital customer services also demand creative know-how and innovation competencies of digital agencies.
- 85% of customers expect IT service-providers to be equipped with it as well. Consequently, providers have acquired digital agencies over the last decade.
- 92% of customers expect IT, service providers, to have detailed industry-specific know-how. 50% of top firms admitted that they only work with one or with a particular set of providers to realize the digitalization projects.
- 92% of significant firms expect providers to have creative skills sets like digital agencies. Industry-specific expertise, high technical expertise, skilled employees, and global delivery capabilities are standard requirements by now.
Not many IT service providers can meet these requirements, although some have expanded their portfolio to be able to dynamically support customers in developing digital business models and automating processes. These service providers offer management and IT consulting, innovation expertise, industry-specific expertise, and digital skills. To remain competitive the IT service providers need to embrace digital transformation and fundamentally change – otherwise, they risk being left behind the competition.