Information Services Group(US:III)2026-01-15 15:02Summary of ISG Global Index Call - Q4 2025 Company and Industry Overview - The call was hosted by Information Services Group (ISG), focusing on the IT and business services industry, which influences $200 billion of technology spending annually [5][11] - The ISG Index measures the health and growth of the technology industry, including managed services and cloud-based software and infrastructure services [11] Key Insights and Arguments Market Performance - The Americas led market growth in 2025, crossing $23 billion in managed services ACV for the first time, driven by strong ITO activity and a rebound in BFSI [12] - EMEA saw a 20% increase in ACV for engineering services, with cloud demand accelerating and deal sizes expanding [13] - The global combined market reached $34.3 billion in ACV in Q4 2025, marking a 16% year-over-year increase and the fourth consecutive quarter above $30 billion [14] - The as-a-service market grew 29% globally in 2025, while managed services grew only 1.3% [14][15] Segment Performance - SaaS accounted for 66% of the total combined market, with significant growth in cloud, software, and consumption-based services [15] - Managed services faced constraints due to fewer mega-deals and pricing pressure, with a slight decline in Q4 2025 [15][16] - Engineering services were the fastest-growing segment, with a 35% increase in ACV year-over-year, driven by large integrated multinational providers [21] - BPO generated over $2 billion in ACV in Q4 2025, up 13% year-over-year, but faced annual declines [24][25] Regional Insights - The Americas generated $23.5 billion in managed services ACV in 2025, up 9% from 2024, while EMEA's managed services ACV totaled $16.7 billion, down 1.4% [28][30] - Asia Pacific struggled, with managed services ACV down 27% year-over-year, primarily due to a decline in the smallest deal category [31] Future Outlook - For 2026, managed services growth is forecasted at 2.1%, while as-a-service is expected to grow by 20% [54] - Enterprises are navigating macroeconomic uncertainties, but investments in AI and cloud infrastructure are expected to continue [54] - The demand for AI-driven outcomes and flexible commercial models will shape the future of the outsourcing market [55] Additional Important Insights - The engineering segment showed strong growth across various sectors, with EMEA leading in ER&D spend, up 86% for the year [22] - AI is now a dominant driver of growth, with hyperscaler investments significantly impacting the market [13][41] - The BPO market is in a reset mode, with uneven growth concentrated in specific functions and industries, particularly industry-specific BPO [26][84] - The call highlighted the importance of AI in transforming traditional outsourcing models, with a focus on hyper-personalization and domain-led transformation [84] This summary encapsulates the key points discussed during the ISG Global Index call, providing insights into market performance, segment growth, regional dynamics, and future outlooks in the IT and business services industry.