Security overtakes price as top driver for telco switching, McKinsey says
A McKinsey study showed companies value data privacy and control more than network performance.
Telecom operators across Asia face a shift in enterprise demand as spending moves toward AI, cybersecurity, and integrated digital services, according to research from McKinsey & Company.
Connectivity remains necessary but is no longer the main growth driver, according to the company’s Winning B2B customers in technology and telecommunications report, with core connectivity growing at under 5% annually, whilst security and AI-enabled services are expected to grow more than 9%.
More than 60% of enterprises surveyed globally plan to increase technology and telecom spending, with stronger growth in emerging markets, including parts of Asia and the Pacific.
Security has overtaken price and coverage as the main reason for switching providers, whilst data sovereignty and privacy controls rank above traditional network metrics in purchase decisions.
Around three-quarters of customers intend to stay with their current provider, but retention increasingly depends on proven ability to safeguard data and maintain compliance, according to the report.
About one-third of B2B customers prefer digital-first engagement, whilst roughly 60% favour hybrid models combining digital tools with human support.
Enterprises expect to handle routine services online but still require advisory input for complex deployments.
Approximately 80% of large and mid-sized enterprises report using agentic AI in some way, compared with about 65% of SMEs.
Customer care is the most common use, followed by IT operations, cybersecurity, and fraud detection, though full enterprise-wide adoption remains limited.
Enterprises with advanced AI deployments are more likely to complete higher-value transactions digitally, whilst around 98% of surveyed customers are open to AI-enabled support for operational tasks such as billing or troubleshooting.
However, acceptance drops for sales and strategic advisory roles.
About 80% of buyers prefer third-party or off-the-shelf AI solutions across functions including customer service and marketing, with telecom operators, hyperscalers, system integrators, and AI-native firms all competing, and no single provider dominating.
Operators that combine network assets with cybersecurity, edge infrastructure, compliance expertise, and managed AI services may capture a larger share of enterprise budgets, with execution, regulatory alignment, and data governance all affecting competitiveness, according to the report.
The report shows that B2B telecom growth is increasingly tied to delivering secure, AI-enabled operational infrastructure rather than bandwidth alone.
