Hello. This is Stanton Jones and Steve Hall with a special recap of the 4Q and Full Year 2025 ISG Index call. You can download the slides here, and watch a replay here.
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2025 Recap
IT and business services sector growth continued to be anchored in cloud and software, while managed services growth remained uneven and constrained across geographies and industries. Enterprise buyers concentrated spend in fewer, larger strategic agreements, reflecting a cautious but deliberate approach to transformation.
Managed Services 2025 ACV Results
- Service Lines: ITO up 2%; Engineering up 35%; BPO down 14%
- Regions: Americas up 9%; EMEA down 1%; Asia Pacific down 27%
- Industries: BFSI up 1%; Energy up 34%; Manufacturing down 4%
As-a-service 2025 ACV Results
- SaaS Regions: Americas up 15%; EMEA up 19%; Asia Pacific up 19%
- SaaS Top 10 Providers: up 20%
- IaaS Regions: Americas up 45%; EMEA up 43%; Asia Pacific up 8%
- Big 3 Hyperscalers: up 41%
2026 Outlook
Enterprises will continue to navigate unprecedented levels of economic policy uncertainty. This uncertainty will continue to constrain discretionary spending as companies focus on transformation-led cost optimization.
At the same time, AI-related demand will continue to be very strong. This will drive growth in cloud, platforms and AI-enabled engineering and business process services. It will also put significant pressure on traditional labor-based pricing and productivity benchmarks.
Given this, here’s our forecast:
- Managed services: Growth remains modest at 2.1%. The Americas will remain strong while EMEA and Asia Pacific continue to face headwinds.
- As-a-Service: Growth remains strong at 20%. Cloud migration, AI adoption, cybersecurity investments and platform-led consumption will be the key drivers.
You can catch a replay of the call here and download the slides here.
About the authors
Stanton Jones
Stanton helps enterprise technology leaders, IT service providers and buy- and sell-side professionals make sense of the global IT services sector. Stanton's weekly briefing - the Index Insider - is read by thousands of industry stakeholders each week.
Steve Hall
Steve is Chief AI Officer providing strategic insight and advice to help ISG clients in the region solve their most critical business challenges and adopt and optimize the technology and operating models they need to compete successfully.
Steve was named Chief AI Officer in 2024. He leads the firm’s work to help clients create an AI strategy, establish a business case for investment and select the right business partners. His industry-leading expertise in navigating the complexities of adopting technology at scale is helping clients drive value into every aspect of their operations.
Steve joined ISG in 2005 and has led ISG Digital Advisory Services, Emerging Technology Services, Global Product Engineering and Application Development & Maintenance. He is trained as a software engineer and holds a bachelor’s degree in computer science from Regis University.
