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The Latest from the ISG Index

 
Market Level Set

1Q25 Recap

  • Combined Market grew 18% Y/Y even as decision making slowed in some areas
  • Managed Services up 2% Y/Y on broad-based growth in both Applications and Infrastructure
  • Engineering generated best quarter ever, even with Manufacturing weighing on results
  • BPO weakness across the board in 1Q25, but on TTM basis only slightly down
  • BFSI vertical showed signs of green shoots over past six months
  • Both laaS and SaaS generated double-digit Y/Y growth

Sector Outlook

  • Tariffs have raised short-term uncertainty; will likely see a pullback in discretionary IT spend
  • Negative impact on application-related work where ~40% is variable
  • Vulnerability in capital intensive programs like SAP S/4HANA migrations
  • Manufacturing and Travel sectors most exposed; BFSI recovery at risk; monitoring Life Sciences
  • EU digital services tax could impact XaaS market
  • Continue to see strong demand for cloud and Al related transformation and cost optimization

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About ISG Index™

The ISG Index is the authoritative source for marketplace intelligence on the health and growth of the global IT and Business Services Sector. Using our unprecedented data assets, as well as our practitioner-led view into the industry, the Index research program provides investors, service providers, technology vendors and enterprise technology leaders with the most up-to-date view into key changes in demand, pricing, talent and provider landscapes.

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