{"id":869011,"date":"2025-07-14T04:03:39","date_gmt":"2025-07-14T08:03:39","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\/"},"modified":"2025-07-14T04:03:39","modified_gmt":"2025-07-14T08:03:39","slug":"europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\/","title":{"rendered":"Europe\u2019s IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index\u2122"},"content":{"rendered":"<p>        <!--.bwalignc { text-align: center; list-style-position: inside }body {font:normal small Arial,Helvetica,sans-serif;color:#000;background-color:#fff;padding:24px;margin:0;} a img {border:0;} h3 {font-size:medium;color:#000;margin:0 0 1em 0; text-align:center;}-->  <\/p>\n<p class=\"bwalignc\"><b>Europe\u2019s IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index\u2122<\/b><\/p>\n<p class=\"bwalignc\"><b>Combined market up 14% in Q2, driven by 34% growth in XaaS<\/b><\/p>\n<p class=\"bwalignc\"><b>Managed services off 4%, as companies limit discretionary spending<\/b><\/p>\n<p>LONDON&#8211;(<a href=\"http:\/\/www.businesswire.com\">BUSINESS WIRE<\/a>)&#8211;<br \/>\nStrong interest in AI continued to drive cloud services growth in Europe during the second quarter, even as demand for managed services slowed under the weight of macro uncertainty, according to the latest state-of-the-industry report from Information Services Group (<a rel=\"nofollow\" href=\"https:\/\/cts.businesswire.com\/ct\/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.isg-one.com&amp;esheet=54289704&amp;newsitemid=20250714957081&amp;lan=en-US&amp;anchor=ISG&amp;index=1&amp;md5=ba7c60b43bb0a35d5352a1e9e257f10c\">ISG<\/a>) (Nasdaq: <a rel=\"nofollow\" href=\"https:\/\/cts.businesswire.com\/ct\/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.nasdaq.com%2Fsymbol%2Fiii&amp;esheet=54289704&amp;newsitemid=20250714957081&amp;lan=en-US&amp;anchor=III&amp;index=2&amp;md5=1f67bf9a796bc97bf11da7e74a52d2eb\">III<\/a>), a global AI-centered technology research and advisory firm.<\/p>\n<p>\nThe EMEA ISG Index\u2122, which measures commercial outsourcing contracts with annual contract value (ACV) of US $5 million or more, shows second-quarter ACV for the combined market (both managed services and cloud-based as-a-service) advanced 14 percent, to US $9.0 billion. Although up double digits year on year, the combined market declined 1.2 percent sequentially from the first quarter, as economic and geopolitical concerns limited discretionary spending on managed services.<\/p>\n<p>\n\u201cEurope continues to embrace the cloud for AI adoption and cost efficiency,\u201d said Steve Hall, president, ISG EMEA and the firm\u2019s chief AI officer. \u201cGiven the region\u2019s macroeconomic and geopolitical instability, there has been a lot of discussion around digital sovereignty in Europe. We view sovereign clouds as a potential growth segment for the industry going forward.\u201d<\/p>\n<p><b>Second-Quarter Results by Segment<\/b><\/p>\n<p>\nACV for the as-a-service (XaaS) segment soared 34 percent year on year, to a record US $5.1 billion, and was up 7 percent sequentially from the first quarter. It was the fifth straight quarter XaaS has grown by double digits, averaging 31 percent in that span, although the Q2 growth rate moderated slightly (down 170 basis points) from Q1.<\/p>\n<p>\nWithin this segment, infrastructure-as-a-service (IaaS) climbed 43 percent year on year, to a record US $3.9 billion, while growing 13 percent from the first quarter. Software-as-a-service (SaaS) grew 12 percent versus the prior year, to US $1.2 billion, although it was down 7 percent sequentially.<\/p>\n<p>\nManaged services ACV in the second quarter dipped 4 percent, to US $3.9 billion, and was down 11 percent sequentially from the first quarter. A total of 240 managed services contracts were awarded in the quarter, down 20 percent from the prior year and down 14 percent from Q1. Among them were three mega deals (ACV of US $100 million or more), compared with four signed in the second quarter last year. Still, the total ACV of the mega deals was up 9 percent year on year, as companies continued to emphasize larger deals aimed cost optimization. The volume of smaller deals under US $10 million declined 31 percent year on year, as enterprises limited discretionary projects.<\/p>\n<p>\nWithin managed services, IT outsourcing (ITO) slumped 21 percent, to US $2.6 billion, with data center services the only growth area. Business process outsourcing (BPO), meanwhile, rose 23 percent, to US $667 million, led by growth in customer engagement, facilities management and finance and accounting services.<\/p>\n<p>\nBy industry, managed services ACV was higher in travel, transportation and leisure (up 90 percent), business services (up 74 percent) and retail (up 10 percent), while the region\u2019s three largest sectors showed mixed results. Energy and manufacturing were up 4 percent and 3 percent, respectively, but banking, financial services and insurance (BFSI), Europe\u2019s largest industry for sourcing, fell 8 percent.<\/p>\n<p>\nACV in the engineering, research and development (ER&amp;D) segment, meanwhile, reached US $953 million, up 193 percent year on year and up 64 percent from the first quarter, as companies invested in digital integration and innovation.<\/p>\n<p><b>Geographic Performance<\/b><\/p>\n<p>\nEMEA&#8217;s largest managed services market, the DACH region, grew 11 percent year on year, to US $1.0 billion, while France rose to the number two spot for ACV, at US $817 million, up 142 percent from the prior year. The UK, traditionally Europe\u2019s largest sourcing market, dropped to third place, at US $770 million, down 41 percent from the prior year. The Nordics, coming in fourth, climbed 72 percent, to US $471 million of ACV.<\/p>\n<p><b>First-Half Results<\/b><\/p>\n<p>\nFor the first half, combined market ACV rose 19 percent, to US $18.2 billion. Managed services, at US $8.3 billion, was up 3.4 percent, while XaaS, at US $9.9 billion, rose 35 percent versus the same period last year. A total of 518 managed services contracts were awarded in the half, down 11 percent from last year, including six mega-deals, even with the prior year. The total ACV of the mega-deals, however, advanced 10 percent year on year.<\/p>\n<p>\nWithin managed services, ITO was essentially flat (up 0.2 percent), at US $6.1 billion, while BPO declined 16 percent, to US $1.2 billion. On the cloud side, the IaaS market grew 41 percent, to US $7.4 billion, while the SaaS market rose 20 percent, to US $2.5 billion.<\/p>\n<p>\nER&amp;D services more than doubled from the prior year, to $953 million of ACV.<\/p>\n<p><b>2025 Global Forecast<\/b><\/p>\n<p>\nFor the full year, ISG is maintaining its forecast of 1.3 percent revenue growth for managed services, reflecting a stabilizing tariff environment but also continued weakness in discretionary spending. At the same time, ISG is raising its previous growth forecast for cloud-based XaaS by 300 basis points, to 21 percent, based on continuing strong demand for AI-driven transformation.<\/p>\n<p>\nHall commented: \u201cIn terms of our macro outlook, it has improved over the last 90 days, yet business uncertainty remains high. That said, AI has emerged as the dominant theme, overcoming many of these concerns to drive the overall market forward.\u201d<\/p>\n<p><b>About the ISG Index\u2122<br \/>\n<br \/><\/b>The ISG Index\u2122 is recognized as the authoritative source for marketplace intelligence on the global technology and business services industry. For 91 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.<\/p>\n<p>\nThe 2Q25 Global ISG Index results were presented during a webcast on July 10. To view a replay of the webcast and download presentation slides, visit this <a rel=\"nofollow\" href=\"https:\/\/cts.businesswire.com\/ct\/CT?id=smartlink&amp;url=https%3A%2F%2Fisg-one.com%2Fresearch%2Fisg-index&amp;esheet=54289704&amp;newsitemid=20250714957081&amp;lan=en-US&amp;anchor=webpage&amp;index=3&amp;md5=59f8bbea6d2acad9e58fe0f6cb19866c\">webpage<\/a>.<\/p>\n<p><b>About ISG<br \/>\n<br \/><\/b><a rel=\"nofollow\" href=\"https:\/\/cts.businesswire.com\/ct\/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.isg-one.com%2F&amp;esheet=54289704&amp;newsitemid=20250714957081&amp;lan=en-US&amp;anchor=ISG&amp;index=4&amp;md5=f361a42be18cdd26358bcbc246f984da\">ISG<\/a> (Nasdaq: <a rel=\"nofollow\" href=\"https:\/\/cts.businesswire.com\/ct\/CT?id=smartlink&amp;url=http%3A%2F%2Fwww.nasdaq.com%2Fsymbol%2Fiii&amp;esheet=54289704&amp;newsitemid=20250714957081&amp;lan=en-US&amp;anchor=III&amp;index=5&amp;md5=c83f900a9ecbcd90dec4ea2b058c0d9a\">III<\/a>) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world\u2019s 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.<\/p>\n<p><img decoding=\"async\" alt=\"\" src=\"https:\/\/cts.businesswire.com\/ct\/CT?id=bwnews&amp;sty=20250714957081r1&amp;sid=flmnd&amp;distro=nx&amp;lang=en\" style=\"width:0;height:0\" \/><span class=\"bwct31415\" \/><\/p>\n<p id=\"mmgallerylink\"><span id=\"mmgallerylink-phrase\">View source version on businesswire.com: <\/span><span id=\"mmgallerylink-link\"><a href=\"https:\/\/www.businesswire.com\/news\/home\/20250714957081\/en\/\" rel=\"nofollow\">https:\/\/www.businesswire.com\/news\/home\/20250714957081\/en\/<\/a><\/span><\/p>\n<p><b>Press Contacts:<\/b><\/p>\n<p>\nPhilipp Jaensch, ISG<br \/>\n<br \/>+49 151 730 365 76<br \/>\n<br \/><a rel=\"nofollow\" href=\"mailto:philipp.jaensch@isg-one.com\">philipp.jaensch@isg-one.com<\/a><\/p>\n<p>\nWill Thoretz, ISG<br \/>\n<br \/>+1 203 517 3119<br \/>\n<br \/><a rel=\"nofollow\" href=\"mailto:will.thoretz@isg-one.com\">will.thoretz@isg-one.com<\/a><\/p>\n<p><b>KEYWORDS:<\/b> United Kingdom Europe<\/p>\n<p><b>INDUSTRY KEYWORDS:<\/b> Data Management Technology Software Networks Artificial Intelligence Internet<\/p>\n<p><b>MEDIA:<\/b><\/p>\n<table cellpadding=\"3\" cellspacing=\"3\">\n<tr>\n<td><font face=\"Arial\" size=\"2\"><b>Logo<\/b><\/font><\/td>\n<\/tr>\n<tr>\n<td><img decoding=\"async\" src=\"https:\/\/mms.businesswire.com\/media\/20250714957081\/en\/1016900\/3\/ISG_%28R%29_Logo.jpg\" alt=\"Logo\" \/><\/td>\n<\/tr>\n<tr>\n<td><font face=\"Arial\" size=\"2\"><\/font><\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"<p>Europe\u2019s IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index\u2122 Combined market up 14% in Q2, driven by 34% growth in XaaS Managed services off 4%, as companies limit discretionary spending LONDON&#8211;(BUSINESS WIRE)&#8211; Strong interest in AI continued to drive cloud services growth in Europe during the second quarter, even as demand for managed services slowed under the weight of macro uncertainty, 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 EMEA ISG Index\u2122, which measures commercial outsourcing contracts with annual contract value (ACV) of US $5 million or more, shows second-quarter ACV for the combined market (both managed services and cloud-based as-a-service) &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.marketnewsdesk.com\/index.php\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Europe\u2019s IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index\u2122&#8221;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-869011","post","type-post","status-publish","format-standard","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Europe\u2019s IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index\u2122 - Market Newsdesk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.marketnewsdesk.com\/index.php\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Europe\u2019s IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index\u2122 - Market Newsdesk\" \/>\n<meta property=\"og:description\" content=\"Europe\u2019s IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index\u2122 Combined market up 14% in Q2, driven by 34% growth in XaaS Managed services off 4%, as companies limit discretionary spending LONDON&#8211;(BUSINESS WIRE)&#8211; Strong interest in AI continued to drive cloud services growth in Europe during the second quarter, even as demand for managed services slowed under the weight of macro uncertainty, 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 EMEA ISG Index\u2122, which measures commercial outsourcing contracts with annual contract value (ACV) of US $5 million or more, shows second-quarter ACV for the combined market (both managed services and cloud-based as-a-service) &hellip; Continue reading &quot;Europe\u2019s IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index\u2122&quot;\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.marketnewsdesk.com\/index.php\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\/\" \/>\n<meta property=\"og:site_name\" content=\"Market Newsdesk\" \/>\n<meta property=\"article:published_time\" content=\"2025-07-14T08:03:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/cts.businesswire.com\/ct\/CT?id=bwnews&amp;sty=20250714957081r1&amp;sid=flmnd&amp;distro=nx&amp;lang=en\" \/>\n<meta name=\"author\" content=\"Newsdesk\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Newsdesk\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.marketnewsdesk.com\\\/index.php\\\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.marketnewsdesk.com\\\/index.php\\\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\\\/\"},\"author\":{\"name\":\"Newsdesk\",\"@id\":\"https:\\\/\\\/www.marketnewsdesk.com\\\/#\\\/schema\\\/person\\\/482f27a394d4fda80ecb5499e519d979\"},\"headline\":\"Europe\u2019s IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index\u2122\",\"datePublished\":\"2025-07-14T08:03:39+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.marketnewsdesk.com\\\/index.php\\\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\\\/\"},\"wordCount\":1070,\"image\":{\"@id\":\"https:\\\/\\\/www.marketnewsdesk.com\\\/index.php\\\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/cts.businesswire.com\\\/ct\\\/CT?id=bwnews&amp;sty=20250714957081r1&amp;sid=flmnd&amp;distro=nx&amp;lang=en\",\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.marketnewsdesk.com\\\/index.php\\\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\\\/\",\"url\":\"https:\\\/\\\/www.marketnewsdesk.com\\\/index.php\\\/europes-it-business-services-market-boosted-by-ai-driven-cloud-demand-in-q2-isg-index\\\/\",\"name\":\"Europe\u2019s IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index\u2122 - 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