AI Adoption Accelerates as U.S. Companies Seek Efficiency and Quality, Says ISG Report

A new report from Information Services Group (ISG) III highlights how growing adoption of artificial intelligence (AI) and cloud technology has significantly altered application development and management (ADM) strategies among U.S. enterprises over the past year.

According to the 2024 ISG Provider Lens™ Next-Gen ADM Services report, companies are increasingly focusing on cost optimization. This shift has driven the integration of AI throughout the application lifecycle and sparked initial uses of generative AI (GenAI).

Shafqat Azim, an ISG partner and the leader for Digital Transformation in the Americas, remarked, “AI-driven ADM services are transforming the operations of U.S. enterprise IT departments. Service providers have enabled clients to modernize ADM through AI, reaping major operational benefits.”

The report indicates that AI tools are streamlining ADM tasks, enhancing software quality, and minimizing downtime. Noteworthy benefits include higher efficiency, improved developer productivity, a quicker path to market, and proactive maintenance capabilities.

Quality assurance remains a crucial concern for U.S. enterprises, with GenAI offering significant promise. By automating test creation and simulating scenarios, GenAI can expedite testing processes and identify issues that might escape human inspection. As companies delve into these opportunities, they are focused on ensuring that GenAI applications operate correctly and ethically, according to ISG.

A rising trend among enterprises includes seeking provider partnerships that encompass both applications and foundational IT infrastructure, covering servers, networks, and cloud services. These arrangements aim to optimize performance, scalability, and security, while also cutting costs and simplifying vendor management.

ISG notes that companies are increasingly moving development to prominent public cloud platforms to create applications that are more scalable and adaptable. Tools like Kubernetes, combined with microservices, containerization, and DevOps practices, have facilitated this transition.

“Cloud-native development enables enterprises to swiftly adapt to shifting market trends and customer demands,” explained Jan Erik Aase, ISG’s partner and global leader for Provider Lens Research. “This agility is a significant factor motivating companies to relocate application development to the cloud.”

The report highlights the growing fusion of site reliability engineering (SRE) and AI for IT operations (AIOps). This new approach utilizes machine learning and advanced analytics to analyze vast amounts of operational data, offering companies valuable insights into system performance. Consequently, SRE teams can proactively identify and fix potential problems, ensuring continuous service delivery.

Additional ADM trends detailed in the report include providers’ increasing capacity to meet industry-specific needs and the rise of Agile and DevOps frameworks in continuous testing services.

For further details on the ADM challenges facing U.S. enterprises—including complexities in applying AI to specific cases and uncertainties regarding GenAI’s potential return on investment—as well as ISG’s recommendations, refer to the ISG Provider Lens™ Focal Points briefing here.

The 2024 ISG Provider Lens™ Next-Gen ADM Services report evaluates the capabilities of 51 providers across six categories: Agile Application Development Outsourcing, Agile Application Development Projects, Application Managed Services, Application Quality Assurance, Continuous Testing Specialists, and AI-enabled Application Development and Maintenance (AI-ADM).

Accenture, Capgemini, Cognizant, Deloitte, HCLTech, IBM, Infosys, and TCS are recognized as Leaders in four quadrants each. LTIMindtree, Tech Mahindra, and Wipro are Leaders in three quadrants each. Apexon, Hexaware, and UST are Leaders in two quadrants each. Meanwhile, Birlasoft, Cigniti, Coforge, DXC Technology, Eviden (Atos Group), HTC Global Services, Infinite Computer Systems, Persistent Systems, and Qualitest are Leaders in one quadrant each.

Additionally, Quinnox is designated as a Rising Star—a company with a “promising portfolio” and “high future potential” by ISG—in three quadrants. Hitachi Digital Services is a Rising Star in two quadrants, while Mphasis and TestingXperts are recognized as Rising Stars in one quadrant each.

In customer experience, Persistent Systems achieved recognition as the global ISG CX Star Performer for 2024 among next-gen ADM service providers, receiving the highest customer satisfaction scores in ISG’s Voice of the Customer survey, part of the ISG Star of Excellence™ program, which is a top honor in technology and business services.

Customized editions of the report are available from Apexon, Capgemini, Persistent Systems, Qualitest, and QA Consultants.

The 2024 ISG Provider Lens™ Next-Gen ADM Services report is accessible to subscribers or can be purchased on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series uniquely combines data-driven research with the practical insights of ISG’s advisory team. This allows enterprises to access comprehensive data and analysis to help in selecting the right sourcing partners. ISG advisors utilize the reports to validate market knowledge and offer recommendations to clients. The research currently covers providers offering services globally, including markets in the U.S., Canada, Mexico, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia, and Singapore/Malaysia, with more regions anticipated in the future. For further information about ISG Provider Lens research, please visit this webpage.

About ISG

ISG (Information Services Group) III stands as a premier technology research and advisory firm. Serving over 900 clients, including more than 75 of the top 100 global enterprises, ISG is dedicated to helping organizations in the corporate and public sectors, as well as service and technology providers, achieve operational excellence and rapid growth. The firm specializes in digital transformation services such as AI, cloud, and data analytics; sourcing advice; managed governance and risk services; network carrier services; strategy and operations design; change management; and market intelligence. Founded in 2006 and headquartered in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals across 20 countries, known for innovative thinking and deep industry expertise. For more information, visit www.isg-one.com.

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