IT SERVICESThe Rates of Success, Goals, and Future Priorities
of Digital Transformations, by Sector

The key ﬁndings for IT service companies
The IT services sector has focused onhigh demand for digital transformationin various sectors, marked by a strong
leadership commitment and an
integrated growth strategy—but it has
faced signiﬁcant challenges on talent
and agile governance.

Most leading organizations haveconcentrated on external orclient-facing digital initiatives such as
customer experience and journeys,
growth and business model innovation,
sales and marketing acceleration, anddigital ecosystem and partnerships.

Successful digital players are also
pivoting toward internal digitizationeﬀorts such as digitizing employee
journeys and support functions.

The pace of digital adoption in IT
service companies needs to accelerate.
Overall, 45% of IT service companies
are in the win zone, a lower percentage
than such other TMT segments asinternet-based companies (58%) andhardware and devices companies (52%)
have achieved.

The forward-looking digital agenda
for IT service companies includes
service delivery and operations,sales and marketing, security,
support functions, and R&D.

ESG considerations—especiallythose related to data privacy, cyber
resilience, and the use of analytics
for emissions reduction—arebecoming more important.

Source: BCG analysis.

The data in more depth

Rates of successin digitaltransformation

Source: BCG analysis.

Topics of focus
for IT service
companies

Top priorities forthe future

The criticalhuman andtech enablers

The role of ESG
in digitaltransformation

RATES OF SUCCESS

About 45% of IT service companies fall in the win zone, 1.3 times thecross-industry average
CASES BELOW SUCCESS SCORE (%)
10080

IT services data points
IT services

602021 cross-industry
average: 7.440

IT services
sector average:
7.7

20

Cross-industry
Woe zone (success score <6)
Worry zone (success score ≥6–<8)
Win zone (success score ≥8)

00

2

4

68

10
SUCCESS SCORE1

2021 BCG Global Digital
Transformation Survey overall

IT services sector

13%

52%

35%

11%

44%

44%

Limited value created(<50% of target); no
sustainable change

Value created but total Target value met ortargets not met;
exceeded; sustainable
limited long-term change change created

Source: 2021 BCG Global Digital Transformation Survey.
Note: Survey question: “Across the following dimensions, please rate your organization’s digital transformation experience to date on a scale of 1 to 10, using the guidelines in the table below.”
1Success score is calculated from respondents’ answers on six dimensions of transformation: strategy; leadership; talent; agility; monitoring; and tech and data.

1.3x cross-industry average

RATES OF SUCCESSIT service companies nearly clear the bar on leadership commitment andintegrated strategy, but struggle to achieve an agile governance mindset
DISTRIBUTION OF SUCCESS SCORES ON INDIVIDUAL KEY FACTORS1Integrated strategy with clear transformation goals

2

Leadership commitment from CEO through middle management3

Deployment of high-caliber talent

4

An agile governance mindset that drives broader adoption

5

Eﬀective monitoring of progress toward deﬁned outcomes6

Business-led modular technology and data platform
IT services average

1

2

3

4

5

6

78

910

7.8

1Lower extreme

08.0
7.1
6.9
7.4
7.6

Upper or lower quartile Upper extremeWoe zone (success score <6)

Worry zone (success score ≥6–<8)

Source: 2021 BCG Global Digital Transformation Survey.
Note: Survey question: “Across the following dimensions, please rate your organization’s digital transformation experience to date on a scale of 1 to 10 using the guidelines in the table below.”
1Success score is calculated from respondents’ answers on six dimensions of transformation: strategy; leadership; talent; agility; monitoring; and tech and data.

Win zone (success score ≥8)

TOPICS OF FOCUS

The transformation priorities for IT services have been customer experienceand journeys, growth and business model innovation, and cybersecurity
Strategic objectives

Scope of digital transformation1

SHARE OF RESPONDENTS (%)

SHARE OF RESPONDENTS (%)

CROSS-INDUSTRYAVERAGE (%)

Customer experience and journeys
31

27

24

19

Improvement incustomer experienceand go-to-market

Innovation and growthin the core and beyond
Performance improvement
through the operational
value chain
Performance improvementin support functions

90
73

Growth and business model innovation

70

Sales and market acceleration

81
72
71

Building resilience via cybersecurity
and compliance

6754

Digital ecosystem and partnerships

67

65

Supply chain

63

Digitizing support functions

60

Digital manufacturing and operations53Marketing and dynamic pricing

50

Digital procurement
New business venture

Source: BCG Global Digital Transformation Survey, 2021, n = 30.
Note: Because of rounding, the percentages given for the strategic objectives do not add up to 100%.
1Respondents were asked to select all priorities that applied.

4740

48
46
50
41
54
45

TOPICS OF FOCUS

Win-zone companies focus more on sales and marketing, partnerships, andsupport functions than worry- and woe-zone companies do
Scope of digital transformation

SHARE OF RESPONDENTS (%)–8 pp

100–13 pp

9280

23 pp

22 pp

83
67

60

20 pp31 pp–11 pp7553–23 pp

0 pp

6767

736753

47

18 pp

58

50

4240

27

Customerexperience
andjourneys

Growth andbusinessmodel
innovation

Sales andmarket
acceleration

Digitalecosystem
andpartnerships

Woe- and worry-zone IT service companies (combined)

Digitizing
supportfunctions

Building
resilience via
cybersecurity
and complianceMarketinganddynamicpricing

Win-zone IT service companies

Supply chainDigitalprocurement

Change of +5 pp or less

Source: BCG Global Digital Transformation Survey 2021, n = 30.
Note: Source question: “From the list of most common digital outcome areas and enablers in digital transformation, please help us identify the scope of your digital transformation (select all that apply).”

0 pp

58

Digitalmanufacturing
and operations

33

33

New
businessventure

Change of more than +5 pp

TOPICS OF FOCUS

Win-zone companies are starting to shift focus from customer-oriented
activities to topics related to digital operations and innovation
Scope of digital transformation

SHARE OF RESPONDENTS (%)

22 pp
20 pp

–8 pp

100

31 pp

75

18 pp

67
92–11 pp53

Customerexperienceand journeys

53

58
47

Woe- and worry-zone IT service companies (combined)

402742Marketingand dynamicpricing

58

Digitalecosystem andpartnerships
Win-zone IT service companies

Digitizing
supportfunctions

Digitalprocurement

Change of +5 pp or less

Source: 2021 BCG Global Digital Transformation Survey.
Note: Survey question: “From the list of most common digital outcome areas and enablers in digital transformation, please help us identify the scope of your digital transformation (select all that apply).”

Digitalmanufacturingand operations

Change of more than +5 pp

TOP PRIORITIES FOR THE FUTURE

Most IT service companies intend to invest half of their digital spending
in delivery of services and operations and next-generation security
PLANNED SHARE OF WALLET SPENDING ALLOCATED ACROSS DIGITAL TOPICS IN THE NEXT TWO TO THREE YEARS (%)1100

Delivery of services
and operations

2797

Next-generation security

2090

Next-generation sales
and marketing

1983

Digital R&D/designand engineering
Digital support functions

1893
16
Share of respondents allocating any investment toward each digital topic

Average share of total investment

Source: 2021 BCG Global Digital Transformation Survey.
1For example, the uppermost pair of bars can be read as “100% of IT service respondents plan to invest in delivery of services and operations, allocating an average 27% of total digital investment.”

TOP PRIORITIES FOR THE FUTURE

IT service companies’ digital priorities: Delivery of services and operations
Digital initiatives (bars indicate relative prioritization of initiatives)
Smart demand-forecasting engine

1.00

Cloud data warehouse solutions to support data engineering

1.00

Automation of product/delivery life cycles (continuous testing, integration)

1.00

Optimized resource planning and allocation

0.75

Capacity and proﬁtability planning

0.73

Eﬃcient teaming using collaboration tools and communication channels

0.59

Digital tools to support agile delivery

0.41

Digital tools to identify potential areas of automation and focus

0.34

Digital control tower for transparency and people optimization

0.32

Relative prioritization for all IT services companies
Source: 2021 BCG Global Digital Transformation Survey, n = 30.

Top priorities for win-zone companies

TOP PRIORITIES FOR THE FUTURE

IT service companies’ digital priorities: Next-generation security
Digital initiatives (bars indicate relative prioritization of initiatives)
AI-powered network threat identiﬁcation

1.00

Cloud application monitoring

0.72

Automated threat hunting

0.58

AI-driven anomaly identiﬁcation

0.56

Text/pattern recognition for phishing

0.22

Automated incident investigation

0.21

Data exﬁltration detection

0.14
Relative prioritization for all IT services companies

Source: 2021 BCG Global Digital Transformation Survey, n = 30.

Top priorities for win-zone companies

TOP PRIORITIES FOR THE FUTURE

IT service companies’ digital priorities: Next-generation sales and marketing
Digital initiatives (bars indicate relative prioritization of initiatives)
Personalized oﬀering and targeting based on data-driven customer insights

1.00

Demand sensing/forecasting (e.g., ML to pick up sales signals)

0.97

Digital immersion experience creation for client engagement

0.88

Automated pricing generation and dynamic pricing adjustment

0.82

Marketing automation system

0.63

Account planning through digital tools (e.g., dashboards)

0.54

Smart contract management (automated contract generation,eSign for contracts)

0.31

Data-driven key account identiﬁcation

0.31

Data-driven churn management

0.03
Relative prioritization for all IT services companies

Source: 2021 BCG Global Digital Transformation Survey, n = 30.

Top priorities for win-zone companies

TOP PRIORITIES FOR THE FUTUREIT service companies’ digital priorities: Digital R&D and designand engineering
Digital initiatives (bars indicate relative prioritization of initiatives)
Real-time customer data collection to guide design and research

1.00

ML-driven product design, planning, and development

1.00

Analytics-enabled responsive engineering and R&D

0.74

Digital twin to enable real-time analysis of productdevelopment and performance

0.50

Next-generation integrated design and product-engineering services

0.43

Data-driven estimate of post-release failure early in development cycle

0.28

Digital auto-updating of information for compliance

0.15

Automation of digital pipeline

0.15

Predictive product testing

0.13
Relative prioritization for all IT services companies

Source: 2021 BCG Global Digital Transformation Survey, n = 30.

Top priorities for win-zone companies

TOP PRIORITIES FOR THE FUTURE

IT service companies’ digital priorities: Digital support functions
Digital initiatives (bars indicate relative prioritization of initiatives)
End-to-end procure-to-pay digitization for procurement

1.00

End-to-end record-to-report digitization of ﬁnance activities

0.94

End-to-end source-to-contract digitization for contracting

0.91

End-to-end order-to-cash digitization for managementof accounts receivable

0.77

End-to-end hire-to-retire digitization (includingintegrated training) for HR

0.77

Relative prioritization for all IT services companies

Source: 2021 BCG Global Digital Transformation Survey, n = 30.

Top priorities for win-zone companies

THE CRITICAL ENABLERS

IT service companies intend to invest across a broad range of tech andhuman enablers
Nine out of ten IT service companies plan to invest in infrastructure and cloud enablement, AI and big data, cybersecurity, andmodernization of tech organization allocating on average about 60% of their total digital enabler spending to these areas
PLANNED SHARE OF WALLET SPENDING ALLOCATED ACROSS ENABLER DIGITAL TOPICS IN THE NEXT TWO TO THREE YEARS (%)193Tech93

Human89898270706363
17Infrastructure
and cloudenablement

14AI and big data

10

Modernizationof techarchitecture

15

14
8

Cybersecurity

Modernization oftechnology
organization andoperating model

Share of respondents allocating any investment toward digital topic

Integrated
ecosystems

10

6
Continuous
learning

New ways ofworking

Average share of total investment

Source: 2021 BCG Global Digital Transformation Survey, n = 30.
1For example, the leftmost pair of bars can be read as ”93% of IT service respondents plan to invest in Infrastructure and cloud enablement, allocating an average 17% of their total digital enablers spending.”

7
New talent andleadershipmodels

ROLE OF ESG IN DIGITAL TRANSFORMATION

About 83% of IT service companies
plan to increase investments in ESG(in line with cross-industry averages)… with greater emphasis on Sand G dimensions

Share of respondents planning to increase/decrease/maintain investment toward ESG in coming years

Leading digital initiatives being prioritized
to support E, S, and G goalsModerately
increase

57

Maintain as inprevious year(s)Decrease vs.
previous year(s)

25

170

Source: 2021 BCG Global Digital Transformation Survey, n = 30.

Environment

26· Reducing carbon footprint throughpredictive maintenance of assets
driven by AI and analytics· Digital supply chain optimization~47

SocialSigniﬁcantly
increase

SHARE OF RESPONDENTS PRIORITIZING (%)

CROSS-INDUSTRY AVERAGE (%)· Ensuring protection of clients’, employees’,
and/or customers’ data
· Improving employee health and safety
through software solutions, wearables, etc.

~80

· Critical risk incident management,building cyber resilience· Real-time tracking/monitoring of risk

~6256

171Governance

IT SERVICE AVERAGE (%)

If you would like to discuss this topic, please contact one of the authors:
SAIBAL CHAKRABORTY

SUMIT SARAWGIManaging Director & Partner, New Delhi
chakraborty.saibal@bcg.com+91 124 459 7274

Managing Director & Senior Partner, New Delhi
sarawgi.sumit@bcg.com+91 124 459 7233

NAVNEET VASISHTH

DEREK KENNEDY

Managing Director & Senior Partner, London
vasishth.navneet@bcg.com+44 7500 828172

Managing Director & Senior Partner, San Francisco
kennedy.derek@bcg.com+1 415 732 8124

SCOTT STEMBERGERManaging Director & Senior Partner, Denver
stemberger.scott@bcg.com+1 720 800 9803