Index Insider | The War for Enterprise Wallet Share

Hello. This is Stanton Jones with what’s important in the IT and business services industry this week.

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What You Need to Know

The recent strong growth in new scope activity coupled with a sharp decline in extension and renewal activity signals that the industry is currently highly competitive, with providers competing for shifts in enterprise wallet share.

Data Watch

What's Happening

As we discussed on the 2Q 2026 Index Call last week, we’ve seen very strong growth in “new scope” bookings activity over the past few quarters. To dig deeper into that trend, we analyzed the split between new and renewal scope for the last five years on a trailing 12-month basis, as you can see in this week’s Data Watch.

The reason the split between new and renewal/extension contract value is important is that it can help to tease out where annual contract value (ACV) growth is coming from.

When renewal and extension ACV is strong, it typically signals uncertainty. Enterprises focus on extending and renewing what they already have as they wait out uncertainty. You can see that in the “uncertainty phase” above.

New scope can signal two different things. First, it can be new scope (and spend) coming to the market. For example, after the pandemic, companies outsourced many functions they had never outsourced before because they recognized that their systems were not as resilient as they had thought. That’s what happened during the post-pandemic phase above. 

But new scope can also mean a shift in wallet share at an enterprise. When something is already outsourced, but a new provider takes over that work (at the expense of an incumbent) that is “new” scope for the provider. And in our view, that’s what we’re seeing more of right now.

And that brings us to the current “AI phase”. Providers are competing aggressively to win share today, often based on the promise of what AI will deliver tomorrow. This, of course, makes it hard for incumbent providers to extend or renew their scope, especially in an environment where near-term cost savings are such a high priority.

And as we said on the call last week, we think this trend will continue. Enterprises are hungry for AI and need cost savings now. Providers are hungry for growth and are willing to take on more commercial risk to gain market share.

That means that despite the double-digit growth we’re seeing in new scope activity, we’re holding our forecast at 2.1% growth for the year given that we’ll also likely continue to see downward pressure on renewal activity as providers aggressively compete for wallet share.