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3Q23 INDEX PREVIEW
Cost optimization continues to be the primary driver for IT and business process outsourcing activity across the globe, while discretionary spending remains under pressure.
Questions We’ll Address on the Call
- What’s driving the strong demand for cost optimization? In the Americas, we’re seeing continued demand around larger transactions focused on transformation-led savings, while in Europe, we’re seeing firms pursue cost optimization in response to rising energy prices and interest rate uncertainty. And in the Asia Pacific region, enterprises are focused on optimizing software costs, which continues to put pressure on cloud bookings in the region.
- How will the strong enterprise activity around global capability centers impact the sector? As we discussed last week, the number of client questions and conversations around global capability centers are at an all-time high. And most of this interest is in search of cost reduction and talent. However, the data shows these are the same reasons enterprises are moving away from or even monetizing their capability centers.
- When will we start to see the impact of generative AI? As we discussed two weeks ago, generative AI use cases are maturing quickly in areas like code generation and data migration, with many more use cases on the way. This will have an outsized impact on the biggest service line within the sector – applications development and maintenance.
Register for the Call
I hope you can join Steve, Kathy, Namratha, Alex and me on the 3Q23 ISG Index call next Thursday, October 12 at 9:00 AM ET, where we’ll review these key questions and discuss our forecast for the remainder of the year. You can register here.
About the authors
Stanton Jones
Stanton leads ISG's Index research, helping providers, investors and ISG clients make sense of the global IT services sector. Stanton’s weekly newsletter, the Index Insider, is read by thousands of market stakeholders each week. An ISG Digital Fellow, Stanton has been quoted in Fast Company, Forbes and CIO.com, and has appeared on national cable news.
Steve Hall
Steve is President, ISG EMEA, providing strategic insight and advice to help ISG clients in the region solve their most critical business challenges and adopt and optimize the technology and operating models they need to compete successfully.
Steve was named Chief AI Officer in 2024. He leads the firm’s work to help clients create an AI strategy, establish a business case for investment and select the right business partners. His industry-leading expertise in navigating the complexities of adopting technology at scale is helping clients drive value into every aspect of their operations.
Steve joined ISG in 2005 and has led ISG Digital Advisory Services, Emerging Technology Services, Global Product Engineering and Application Development & Maintenance. He is trained as a software engineer and holds a bachelor’s degree in computer science from Regis University.
