State of Service 2025: Manufacturing Transformation Report

 The State of Service 2025 report is research conducted by IFS in partnership with Accenture, analyzing insights from 800 senior manufacturing leaders globally on how service has evolved from a support function into a strategic profit engine through Industrial AI, servitization, and sustainability.

Servitization is the shift from manufacturing and selling products to delivering value through services, such as outcomes-based contracts and tiered service models. 94% of manufacturers report new service models have already impacted their operations, with 39% citing it as central to long-term growth.

96% of manufacturers globally use some form of AI in service delivery, with 28% having fully scaled it across operations. However, nearly three-quarters have not yet scaled AI enterprise-wide, with barriers including data quality issues, legacy system integration, and workforce resistance.

98% of manufacturers report facing labor shortages and skills gaps, leading to increased workloads, operational inefficiencies, and slowed adoption of new tools. In response, over half are investing in internal training academies, e-learning platforms, and academic partnerships to build digital capabilities.

97% of manufacturers view sustainability as strategically important, with 79% actively tracking emissions from service activities and 37% tracking in real time. Manufacturers are implementing circular economy practices like predictive maintenance, refurbished components, and route optimization to reduce environmental impact.

95% of manufacturers experienced supply chain disruptions in the past year that impacted service delivery, with 37% describing the impact as significant. Only 32% feel very confident in their ability to withstand future shocks, prompting investments in advanced planning, scenario modeling, and supplier diversification.

Cloud infrastructure ranks as the top technology priority at 63%, followed by emerging technologies like IoT, AI, and AR. Manufacturers are also investing in customer self-service tools, remote assistance, digital twins, and workforce planning systems to enable scalable, data-driven service operations.

The Nordics lead in AI integration with 37% having fully scaled AI across operations, followed by the USA at 34%. DACH leads in cloud infrastructure focus at 75%, while the Middle East prioritizes emerging technologies at 75% and reports the highest IoT adoption at 48%.