IT Services Market Hits Record $15.5B as AI Drives Cloud Demand

Demand for cloud providers and managed providers each up by double-digits

STAMFORD, Conn.–(BUSINESS WIRE)–
Demand for IT and enterprise providers within the Americas area hit a brand new excessive within the second quarter, as firms continued to emphasise AI adoption and price optimization, in accordance with the most recent state-of-the-industry report from Info Providers Group (ISG) (Nasdaq: III), a world AI-centered expertise analysis and advisory agency.

The Americas ISG Index™, which measures industrial outsourcing contracts with annual contract worth (ACV) of $5 million or extra, reveals second-quarter ACV for the mixed market—together with each cloud-based as-a-service (XaaS) and managed providers—reached a document $15.5 billion, up 26 p.c, the area’s highest progress charge in three years. Sequentially, the Americas was up 6 p.c from the primary quarter.

Demand for each managed providers and cloud providers was sturdy. Managed providers ACV rose 20 p.c versus the prior yr, to $5.9 billion, its greatest quarterly progress charge for the reason that third quarter of 2023. The newest quarter marked the third straight quarter of managed providers progress, a streak final seen in 2022. On the XaaS facet, ACV reached $9.6 billion, up 29 p.c yr over yr, as firms proceed to put money into cloud providers to advance their AI agendas.

A complete of 392 managed providers contracts have been awarded within the second quarter, up 10 p.c from the prior yr. That whole included 5 mega-deals (with ACV of at the least $100 million), up from 4 final yr and three within the first quarter. Considerably, the ACV of the 5 mega offers in Q2 was up 81 p.c from the prior yr, as firms ink bigger offers in pursuit of decrease prices. As well as, new-scope contract quantity and ACV have been each up greater than 30 p.c from a yr in the past, at the same time as the quantity and worth of smaller offers, these underneath $10 million, have been each down, reflecting a delay in discretionary initiatives.

By {industry}, a number of sectors grew by greater than 50 p.c, amongst them vitality, with managed providers ACV up 78 p.c; manufacturing, up 69 p.c, and journey, transportation and hospitality, up 68 p.c. The area’s largest sector by ACV—banking, monetary providers and insurance coverage (BFSI)—grew 20 p.c, whereas the subsequent largest {industry}, healthcare, rose 33 p.c.

“The market acceleration within the Americas continues,” stated Todd Lavieri, ISG vice chairman and president of ISG Americas and Asia Pacific. “Enterprises look like shrugging off macro uncertainty as they proceed to put money into cloud providers to energy their AI ambitions and switch to managed providers to optimize their prices and reinvest the financial savings in new initiatives.”

Outcomes by Phase

Inside managed providers, IT outsourcing (ITO) rose 32 p.c, to $4.6 billion of ACV, led by progress in utility improvement and upkeep (ADM) providers. ACV for enterprise course of outsourcing (BPO), in the meantime, declined by 20 p.c, to $920 million, with weak spot throughout most service areas. Engineering, analysis and improvement (ER&D) jumped 35 p.c, to $326 million.

On the cloud facet, infrastructure-as-a-service (IaaS) ACV climbed 39 p.c, to $7.2 billion, whereas software-as-a-service (SaaS) grew 7 p.c, to $2.5 billion.

First-Half Outcomes

The Americas’ mixed market rose 22.5 p.c yr up to now, to $30.1 billion.

Managed providers ACV was up 11 p.c, to $11.3 billion, on 783 contracts—together with eight mega-deals, in contrast with six such offers final yr. Inside managed providers, ITO was up 24 p.c, to $8.8 billion, whereas BPO fell 29 p.c, to $1.8 billion. Amongst industries, BFSI was up practically 20 p.c within the first half, contributing $550 million to the area’s whole upside. ER&D, in the meantime, superior 22 p.c, to $758 million.

XaaS spending within the first half was up 31 p.c, to $18.7 billion, with IaaS up 42 p.c, to $13.8 billion, and SaaS up 7.5 p.c, to $5.0 billion.

2025 International Forecast

For the total yr, ISG is sustaining its forecast of 1.3 p.c income progress for managed providers, reflecting a stabilizing tariff surroundings but in addition continued weak spot in discretionary spending. On the identical time, ISG is elevating its earlier progress forecast for cloud-based XaaS by 300 foundation factors, to 21 p.c, based mostly on persevering with sturdy demand for AI-driven transformation.

Concerning the ISG Index™

The ISG Index™ is acknowledged because the authoritative supply for market intelligence on the worldwide expertise and enterprise providers {industry}. For 91 consecutive quarters, it has detailed the most recent {industry} knowledge and traits for monetary analysts, enterprise consumers, software program and repair suppliers, regulation corporations, universities and the media.

The 2Q25 International ISG Index outcomes have been introduced throughout a webcast on July 10. To view a replay of the webcast and obtain presentation slides, go to this webpage.

About ISG

ISG (Nasdaq: III) is a world AI-centered expertise analysis and advisory agency. A trusted accomplice to greater than 900 shoppers, together with 75 of the world’s high 100 enterprises, ISG is a long-time chief in expertise and enterprise providers that’s now on the forefront of leveraging AI to assist organizations obtain operational excellence and quicker progress. The agency, based in 2006, is understood for its proprietary market knowledge, in-depth data of supplier ecosystems, and the experience of its 1,600 professionals worldwide working collectively to assist shoppers maximize the worth of their expertise investments.

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Press Contacts:

Will Thoretz, ISG

+1 203 517 3119

will.thoretz@isg-one.com

Julianna Sheridan, Matter Communications for ISG

+1 978-518-4520

isg@matternow.com

Supply: Info Providers Group, Inc.