Current socioeconomic condition in South Korea is characterized by growing country with highly unemployment rate. Enhancing service industry, therefore, is one of the important government policy issues. In addition to quantitative growth of service industries, OECD comparisons between countries as shown in the competitiveness of the domestic service industry, followed by a very low-level, enhancing the competitiveness of service industries are also important issues of national policy. In particular, finance, education, insurance industry, such as relatively large enterprises have entered the service industry to remain competitive and comparable, but the case of small service industries, has shown a very low level of competitiveness. Thus, the world’s leading technology and IT infrastructure can be applied to small and mediumsized service industry in order to improve productivity, customer satisfaction, and service infrastructure, resulting in improving competitiveness. The purpose of this study is to develop government supporting policy issues by analyzing the current usage of IT, problems and requirement analysis, and critical success factors for applying IT to small and medium-sized service industries. For a survey 2,000 samples are collected from service companies. The results show that IT usage is very important to improve competitiveness in small and medium sized service industry. In addition, customized it solutions are needed to satisfy different characteristics of service industry depends on types of business. Finally, government supporting programs of IT has to be improved. The results would be able to provide directions and guide lines of IT utilization in service industries.