Fueled by AI, Tech Spending Continues to Soar in the Americas, Q3 ISG Index™ Finds
Demand for cloud services and managed services both up by double-digits
STAMFORD, Conn.–(BUSINESS WIRE)–
Shrugging off macro uncertainty and driven by interest in AI, enterprises in the Americas accelerated their spending on technology services and software in the third quarter, according to the latest state-of-the-industry report from Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.
The Americas ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of $5 million or more, shows third-quarter ACV for the combined market—including both cloud-based as-a-service (XaaS) and managed services—reached a record $17.3 billion, up 30 percent, the region’s highest growth rate in more than three years.
“The Americas market is roaring right now,” said Todd Lavieri, ISG vice chairman and president of ISG Americas and Asia Pacific. “Enterprises are investing in both long-term transformation initiatives and discretionary projects. They are accelerating their move to the cloud to realize their AI goals, while embracing managed services to optimize their costs and reinvest the savings in new initiatives. Not much is holding them back at the moment.”
Regarding the new H1-B visa policy, Lavieri said the impact of the new $100,000 fee will be muted. “There will be some operational uncertainty in the near term, but the market will adjust. Enterprises are already deep into automation and AI adoption across delivery functions, and this policy will likely accelerate that trend.”
Third-Quarter Results by Segment
ACV for the as-a-service (XaaS) segment climbed 35 percent, to a record $10.9 billion. It was the sixth straight quarter the XaaS market achieved double-digit growth year over year, averaging 29 percent during that span. Within XaaS, infrastructure-as-a-service (IaaS) ACV jumped 42 percent, to $7.9 billion, while software-as-a-service (SaaS) advanced 18 percent, to $2.9 billion.
Managed services ACV rose 22 percent, to a record $6.4 billion, its best quarterly growth rate since the third quarter of 2023. The latest quarter marked the fourth straight quarter of managed services growth, a streak last seen in 2022.
Within managed services, IT outsourcing (ITO) rose 25 percent, to $5.2 billion, led by growth in application development and maintenance (ADM) services and ADM combined with infrastructure services. ACV for business process outsourcing (BPO) rose 4 percent, to $988 million, with growth in facilities management, HR and industry-specific services. Engineering, research and development (ER&D) jumped 35 percent, to $243 million.
A total of 480 managed services contracts were awarded in the third quarter, up 37 percent from last year. That total included four mega-deals (with ACV of at least $100 million), up from three last year but down from five in the second quarter. ACV of the four mega deals in Q3 was up 62 percent from the prior year. At the other end of the spectrum, the volume of deals in the $5 million to $10 million range—the smallest measured by ISG—was a record 266, up 47 percent from the prior year.
By industry, several sectors grew by more than 50 percent, among them energy, up 57 percent, and travel, transportation and hospitality, up 64 percent. The region’s largest sector by ACV—banking, financial services and insurance (BFSI)—grew by 54 percent.
Nine-Month Results
The Americas’ combined market rose 25 percent, to $48.1 billion, year to date. Growth accelerated compared with the 5 percent growth the region had at the nine-month mark of 2024.
XaaS spending year to date was up 32 percent, to $30.2 billion, and now accounts for 63 percent of the combined market, up from 59 percent in the like period last year. IaaS was up 42 percent, to $21.5 billion, while SaaS rose 13 percent, to $8.6 billion.
Managed services ACV was up 15 percent, to an all-time high of $17.9 billion, on a record 1,270 contracts, up 16.5 percent—including 12 mega-deals, compared with nine such deals last year. Within managed services, ITO was up 25 percent, to $14.2 billion, while BPO fell 20 percent, to $2.7 billion. ER&D advanced 19 percent, to $971 million.
Most industries advanced by double digits, led by 42 percent growth in energy and 30 percent growth in BFSI. Business services and retail, meanwhile, were down, both by double digits.
2025 Global Forecast
For the full year, ISG is maintaining its forecast of 1.3 percent revenue growth for managed services, with strong growth in the Americas offset by weakness in Europe and Asia Pacific. At the same time, ISG is raising its previous growth forecast for cloud-based XaaS by 400 basis points, to 25 percent, led by continuing strong, AI-driven demand for IaaS.
About the ISG Index™
The ISG Index™ is recognized as the authoritative source for marketplace intelligence on the global technology and business services industry. For 92 consecutive quarters, it has detailed the latest industry data and trends for financial analysts, enterprise buyers, software and service providers, law firms, universities and the media.
The 3Q25 Global ISG Index results were presented during a webcast on October 9. To view a replay of the webcast and download presentation slides, visit this webpage.
About ISG
ISG (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,600 professionals worldwide working together to help clients maximize the value of their technology investments.
View source version on businesswire.com: https://www.businesswire.com/news/home/20251013828292/en/
Press Contacts:
Will Thoretz, ISG
+1 203 517 3100
[email protected]
Julianna Sheridan, Matter Communications for ISG
+1 978-518-4520
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