In the ever-evolving landscape of technology and telecommunications, business-to-business (B2B) customers displayed a positive investment outlook for the upcoming year, according to our latest Pulse survey. And, these customers’ needs are clear: from a product perspective, first-class cybersecurity, product features, and integrations are top of mind; and from a vendor perspective, brand and reputation as well as competent sales representatives are central. These findings signal a meaningful shift from historic spending priorities and provider preferences, with the potential to reshape the markets over the coming year. In particular, the market outlook could be viewed as a wake-up call for telecommunications companies, which need to accelerate their efforts to find a compelling value proposition that allows them to play a greater role in the “beyond the core” space. On the other hand, channel partners, tech players and cloud providers especially seem to be well positioned to gain traction and boost their shares in the market.
To gain a deeper understanding of technology and telecommunications market drivers and opportunities, McKinsey regularly conducts a comprehensive survey of a diverse set of business decision makers among enterprises that purchase telecom and technology equipment and services. The latest edition of the Global Technology and Telecommunications B2B Pulse Survey is based on an extensive analysis of more than 3,000 responses from enterprises of all sizes, spanning 11 industries and 15 countries. It serves as a valuable resource for businesses seeking to navigate and grow in the converging technology and telecommunications B2B landscape.
A clear shift in vendor preferences
While the overall outlook for rising customer spending budgets in the tech and telecommunications space appears promising, our survey results show some signals that telecom operators may not have as much to celebrate. Across all product categories, many enterprise customers expressed a clear preference for shifting a sizeable portion of their business to other vendor types, especially channel partners, specialists, and tech manufacturers. In particular, the biggest potential shift away from the telcos looks like it could be in their core fixed and mobile connectivity business.
The degree of desire among respondents to look elsewhere than telcos isn’t universal, however. SMEs, for instance, displayed a roughly 35 percent lower intent to switch away from telecom operators than larger enterprises did. In addition, the trend was strongest in Asia–Pacific and the Americas, and less pronounced in the more conservative European market. Plus there are selected countries such as Nigeria where telecommunications providers are still able to make significant gains beyond connectivity, although the global trend of planning to move away from telcos is similar in Africa overall to the rest of the world.
Of course, intentions don’t always translate into action, and that may well be the case here as well. To date, other types of vendors in most geographies have provided few suitable alternatives to the connectivity offerings from telcos. At the same time, switching providers for even smaller organizations can require a good amount of effort and, at least initially, can be costly. It is no wonder, then, that only about 20 percent of the stated intent to switch vendors that was expressed in last year’s survey actually took place over the past 12 months.
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