IFS has released a global study showing how Industrial AI, among other trends, is reshaping the manufacturing sector. The State of Service 2025: Manufacturing Transformation Report, produced with Accenture, finds that service is no longer a support function but a strategic profit engine, with 39% of respondents citing servitization as central to long-term growth. Based on insights from 800 senior manufacturing leaders, the report highlights that Industrial AI, servitization, and sustainability are transforming how manufacturers compete, operate, and deliver value and that manufacturers must act soon to take advantage of the new opportunities.
The research reveals a sector in transition, driven by technological advances and changing customer expectations. While 63% of manufacturers are prioritizing cloud infrastructure and emerging technologies like AI, IoT, and AR for future growth, there’s a notable gap in AI adoption: 96% use AI in service delivery, but nearly three-quarters haven’t scaled it across operations. To stay competitive as service becomes a core growth driver, manufacturers must accelerate their AI integration and modernization efforts.
Mark Moffat, CEO, IFS, said: “Manufacturing is undergoing a defining transformation. Service has evolved from a support function into a core profit engine, with 94% of manufacturers reporting that new service models are already impacting operations. Industrial AI and sustainability are now central to delivering smarter, faster, and more personalized service.”
Gert Müller, EMEA Intelligent Asset Management Lead, Accenture, said: “Manufacturing today is about innovating faster, optimizing smarter, and delivering service with intelligence at every touchpoint. Service has reached a tipping point: it is no longer a support function but the front line of competitive advantage. With Industrial AI maturing rapidly, manufacturers can anticipate needs, personalize experiences, and extend service value like never before.”
Industrial AI moves from pilot to scale
While 28% of manufacturers have fully scaled AI, many are still struggling with barriers like data quality governance, cybersecurity and data privacy concerns, or integration challenges with legacy systems. Focusing on removing these key blockers is crucial to fully realizing the value of AI in optimizing operations and driving predictive, real-time decision-making.
Reskilling the Workforce for a Service-Led Future
As manufacturers shift from traditional break-fix and warranty models to outcomes-based contracts and tiered service offerings, the workforce must evolve in parallel. With 98% of manufacturers reporting labor shortages, the pressure to build internal capability is intensifying. In response, companies are adopting forward-looking strategies such as internal training academies, e-learning platforms, academic partnerships, and selective automation. These initiatives are not just about filling gaps—they’re about equipping teams with the skills needed to thrive in a digitally enabled, service-centric environment.
Sustainability and circular economy
Sustainability is now a strategic priority for 97% of manufacturers, with 79% tracking emissions from service activity and 37% doing so in real time. Companies are embedding circular economy practices including refurbished components, route optimization, and predictive maintenance to cut waste and extend asset lifecycles.
Resilience under pressure
Supply chain disruption remains a challenge, affecting 95% of respondents over the past year. Yet confidence in resilience is mixed: only 32% feel “very confident”, highlighting ongoing opportunities to strengthen planning, scenario modeling, and local sourcing strategies.
The report underscores that while manufacturers are moving fast to modernize service, there is still significant room for growth. Those that successfully scale AI, embed new service models, and address workforce and sustainability challenges will define the next era of industrial competitiveness.
