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1© 2025 Information Services Group, Inc. All Rights Reserved. Technology Industry Update: Services & Software Sumeet JainInvestment AnalystCLSA October 9, 2025 HOSTED BY: 3Q 2025 © 2025 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval devices or systems, without prior written permission from Information Services Group, Inc.
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2© 2025 Information Services Group, Inc. All Rights Reserved. Market Level SetCloud and software-as-a-service demand remain strong. Large-deal activity remains strong; small deals are rebounding. H-1B policy changes are adding cost and complexity to the industry. AI adoption is accelerating – and disrupting legacy BPO. | 3Q25 Managed services growth continues to be sluggish.
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3© 2025 Information Services Group, Inc. All Rights Reserved. 3© 2025 Information Services Group, Inc. All Rights Reserved. Source: ISG, 2025; ACV = Annual Contract Value ACV $B | 3Q25 3Q25 ResultsCombined market surpassed $32B for first timeManaged services declined 2% Y/Y; first decline in six quartersXaaS best quarter ever, up 31% Y/Y2025 YTD ResultsCombined market ACV up $14B versus 2024Managed services YTD growth rate is slowest since 2020XaaS ACV growth of 29%, up versus 11% growth in 2024 Global Broader Market Managed ServicesCombined Market 25.525.927.630.430.032.6 1Q242Q243Q241Q252Q253Q25 As-a-Service 1.5%YTD18%YTD 29%YTD 10.210.411.210.810.511.0 1Q242Q243Q241Q252Q253Q25 15.215.516.519.619.521.6 1Q242Q243Q241Q252Q253Q25
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4© 2025 Information Services Group, Inc. All Rights Reserved. Implications of H-1B Changes The fee favors higher-wage applicants, making visas more reliable for senior, proven roles and less for speculative or lower-level positions. The $100,000 H-1B fee sets a cost floor that erodes the visa labor advantage as firms must compete to retain transferable workers. The uncertain national interest exemption, combined with the revised lottery system favouring exceptional talent, will reshape the talent pool.As AI reshapes software and IT roles, the higher H-1B costs may accelerate companies’ investments in automation to offset future hiring expenses.New rules may push firms to reassess their mix of onshore, offshore and nearshore talent instead of defaulting to H-1B hires.
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5© 2025 Information Services Group, Inc. All Rights Reserved. 5© 2025 Information Services Group, Inc. All Rights Reserved. ACV = Annual Contract Value ACV $B | 3Q25 Managed Services ITO Results3Q25 ResultsACV down 2% Y/Y; growth declined for second consecutive quarter after two years of solid gains2025 YTD ResultsACV up 5%; Number of awards up 4%19 mega-deals awardedAmericas up 25% YTD; accounted for all growth thus far in the segmentBroad-based growth across ADM and Infrastructure 6.7 14.4 8.8 14.2 Infrastructure ADM EMEA Americas25% 2024 YTD 3% 12% 7.07.88.58.47.88.4 1Q242Q243Q241Q252Q253Q25 2025 YTD2025 YTD Up 5% 11%
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6© 2025 Information Services Group, Inc. All Rights Reserved. 6© 2025 Information Services Group, Inc. All Rights Reserved. ACV = Annual Contract Value ACV $B | 3Q25 Managed Services Engineering Results3Q25 ResultsACV up 59% Y/Y; number of awards up 46% Y/YFourth consecutive quarter of Y/Y ACV gains2025 YTD ResultsACV up 36%; Number of awards up 8%Large MNCs have won nearly half of ER&D awards YTDAverage deal ACV up 26% YTDER&D awards starting to scale; deals with ACV $10M-$40M up 14% 0.80.60.5 0.81.00.8 1Q242Q243Q241Q252Q253Q25 2025 YTD up 36% Engineering ACVby Engineering Type 45% 19%13%12%11% Software - 45%Embedded - 19%Mechanical - 13%Manufacturing - 12%Network - 11%
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7© 2025 Information Services Group, Inc. All Rights Reserved. 7© 2025 Information Services Group, Inc. All Rights Reserved. ACV = Annual Contract Value ACV $B | 3Q25 Managed Services BPO Results3Q25 ResultsACV down 16% Y/Y9 of the past 11 quarters have been down Y/Y2025 YTD ResultsACV down 22% YTDBroad-based weakness across functional areasRevenue Analysis55% of the top 50 have had organic growth rate of less than 3% Notable acquisitions in CX industry are driving growth 2.4 1.82.2 1.51.71.8 1Q242Q243Q241Q252Q253Q25 2025 YTD Down 22%Top 50 BPO ProviderAnnual Revenue Growth Less than 3% growth Growth of 3% or more
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8© 2025 Information Services Group, Inc. All Rights Reserved. | 3Q25 What’s Happening with BPO Significantshift toward hiring for specialized skills such as AI, data science and platform engineering. Marked shift toward technology-led solutions, including data, AI and engineering services, blurring the lines between BPO and IT services. AI is not only enabling new efficiencies but is also disrupting traditional revenue streams.Some enterprises are hesitant to commit to large-scale BPO transformation, preferring FTE-based contracts as a bridge to assess the impact of AI.
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9© 2025 Information Services Group, Inc. All Rights Reserved. | 3Q25 3Q25 9© 2025 Information Services Group, Inc. All Rights Reserved. Pricing 1Price reductions at the end of two years for resource units (RU) across ITO are dropping significantly.Due to intense competition during a time when discretionary and project-based work is under pressure. And fact that AI is starting to have a material impact on pricing. Cumulative Two-Year Price Performance of IT and AMS Managed ServicesInfraNetworkWorkplaceService DeskSecurityAMS0%-5%-10%-15%-20%-25%-30%-35%-40% Historic TrendRecent Trend Recent Price Performance in Managed Services
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10© 2025 Information Services Group, Inc. All Rights Reserved. | 3Q25 What’s Next? Autonomy-Level PricingThe most promising solution for today’s transaction-based services is autonomy-level pricing (ALP). ALP doesn’t discard the resource units (RU) but augments it by tagging each unit with the autonomy level used to deliver it. Autonomy LevelDescriptionAL0Fully manual execution; no AI involvedAL1AI suggests; human executesAL2AI executes, human validatesAL3AI executes, human audits exceptionsAL4Fully autonomous execution; governed only by policies and audits Autonomy Levels DefinedWhy ALP Works1.Fairness: Buyers see cost reductions as autonomy increases; providers retain margin by not overcommitting up front. 2.Variability: Prices flex with real execution behavior, not assumptions. 3.Consistency: Contracts preserve the RU anchor, making deals comparable.4.Competitiveness: ALP levels can be benchmarked across industry peers.5.Incentives. Providers are rewarded for safely advancing autonomy; buyers capture savings w/o waiting for maturity.6.Risk Awareness: Each ALP tier defines governance roles, making risk explicit. 7.Proportionality: Charges map to autonomy, SLA burden and error risk – not arbitrary token counts.
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11© 2025 Information Services Group, Inc. All Rights Reserved. | 3Q25 DOWNLOAD THE REPORTState of Enterprise AI Adoption
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12© 2025 Information Services Group, Inc. All Rights Reserved. 12© 2025 Information Services Group, Inc. All Rights Reserved. Source: ISG, 2025; ACV = Annual Contract Value ACV $B | 3Q25 Americas3Q: Best quarter ever, up 22% Y/YYTD: ACV up 15%; BFSI sector up 30% with $1.3B of additional ACVEMEA3Q: ACV down 25% Y/Y; fell below $4B for third time in four quartersYTD: ACV down 8%; mega deals down 33% and BFSI down 12%Asia Pacific3Q: ACV down 9%; yet to have a $1B+ quarter in 2025YTD: ACV down 26%; most geographic markets down, except India Managed Services Regional Results EMEAAmericasAsia Pacific -X%YTD 26%FullYear-26%YTD15%YTD 5.34.95.35.65.96.4 1Q242Q243Q241Q252Q253Q25 -8%YTD 3.94.15.14.43.83.8 1Q242Q243Q241Q252Q253Q25 1.01.4 0.90.80.90.8 1Q242Q243Q241Q252Q253Q25
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13© 2025 Information Services Group, Inc. All Rights Reserved. Americas Large- and Small-Deal Activity Has Been Strong YTDMega Award ACV ($B)Number of Small Awards Mega Award = ACV > $100M | 3Q25Small Award = ACV $5M - $9M $1.2 $1.8 EMEA Americas 2024 YTD2025 YTD 374 673 EMEA Americas 40% 58% 26% 15%
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14© 2025 Information Services Group, Inc. All Rights Reserved. 14© 2025 Information Services Group, Inc. All Rights Reserved. Source: ISG, 2025; ACV = Annual Contract Value ACV $B | 3Q25 BFSI3Q: ACV up 17%YTD: ACV up 8%; strength in Americas, weakness in EMEAEnergy3Q: ACV up 20%YTD: ACV up 23%; seeing strong demand around SAP S/4HANA and RiseRetail & CPG3Q: ACV down 33% Y/YYTD: ACV down 18%; weakness in EMEA Managed Services Selected Industry Results EnergyBFSI Retail & CPG 23%YTD-X%YTD 26%FullYear-18%YTD All Industry Results in Appendix 8%YTD 3.12.52.53.12.72.9 1Q242Q243Q241Q252Q253Q25 0.90.91.21.11.11.5 1Q242Q243Q241Q252Q253Q25 $0.8 $1.0 $1.0 $0.7 $0.9 $0.7 1Q242Q243Q241Q252Q253Q25
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15© 2025 Information Services Group, Inc. All Rights Reserved. 15© 2025 Information Services Group, Inc. All Rights Reserved. | 3Q25 SaaS Results 1.7 4.1 8.6 Asia Pacific EMEA Americas13% 22% 20% 3Q25 ResultsACV up 18% Y/YSixth consecutive quarter of Y/Y growth averaging 12% 2025 YTD ResultsACV up 16% YTDGrowth across all three regionsTop 10 SaaS providers outperformed the Broader Index 4.14.24.14.94.74.8 1Q242Q243Q241Q252Q253Q25 2025 YTD up 16%2024 YTD2025 YTDACV $B
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16© 2025 Information Services Group, Inc. All Rights Reserved. | 3Q25 Key Trends in Applications (SaaS)AI - including data, analytics and platforms - saw 24% ACV growth YTD with continuous evolution of data software with infused GenAI & agentic AI.Front-office apps and CRM grew 1% ACV growth YTD, with ServiceNow expanding further into CRM market with recent acquisition.Middle-office apps like collaboration saw 23% ACV growth YTD; back-office ERP saw 6% ACV growth YTD; HCM saw -18% ACV decline YTD.IT platforms grew ACV by 55% ACV YTD with Salesforce’s expansion into this well-established software category, currently led by ServiceNow.Collaborative suites (i.e., Google, Microsoft) saw 50% ACV growth YTD, driven by conversational AI and GenAI tools.
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17© 2025 Information Services Group, Inc. All Rights Reserved. 17© 2025 Information Services Group, Inc. All Rights Reserved. | 3Q25 IaaS Results 12.8 12.0 21.5 Asia Pacific EMEA Americas42% 43% 13% ACV $B 11.211.312.414.714.916.8 1Q242Q243Q241Q252Q253Q25 3Q25 ResultsACV up 35% Y/Y; surpassed $16B for first time everFourth consecutive quarter of 30%+ Y/Y growth 2025 YTD ResultsACV up 33% YTDGrowth across all three regionsBig 3 hyperscalers (AWS, Azure, GCP) outperformed broader Index 2024 YTD2025 YTD2025 YTD up 33%
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18© 2025 Information Services Group, Inc. All Rights Reserved. | 3Q25 Key Trends in Infrastructure (IaaS)Expansion of IaaS with 33% YTD ACV growth with Americas (42%) & EMEA (50%) from continued demand for compute needs. Big 3 hyperscalers (i.e., AWS, MSFT, Google) had significant growth including 42% ACV YTD with global and sovereign expansion.Enterprise appetite for digital sovereignty with continued investment from hyperscalers and more regional efforts like SAP news on Delos Cloud. U.S. data centers’ growth and investments (i.e., Nvidia, OpenAI & Oracle: Stargate) are substantial to address AI needs globally and in Americas. Cybersecurity continues to grow in double digits with Crowdstrike, Palo Alto Networks and SentinelOne.
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19© 2025 Information Services Group, Inc. All Rights Reserved. | 3Q25 3Q25 19© 2024 Information Services Group, Inc. All Rights Reserved. ACV = Annual Contract Value ACV $BHealthcare3Q: ACV up 34% Y/Y YTD: ACV up 29%; with IaaS up 34%, along with new SaaS offerings Retail & CPG3Q: ACV up 32% Y/Y YTD: ACV up 32%; with SaaS up 18% and industry application offeringsBusiness Services3Q: ACV up 33% Y/YYTD: ACV up 36%; with IaaS up 40%, more use of cloud and compute As-a-Service Selected Industry Results Retail & CPGHealthcareBusiness Services 32%YTD-X%YTD 36%YTD All Industry Results in Appendix 29%YTD 1.41.51.61.81.92.1 1Q242Q243Q241Q252Q253Q25 2.22.32.52.93.03.2 1Q242Q243Q241Q252Q253Q25 2.22.42.53.03.03.5 1Q242Q243Q241Q252Q253Q25
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3Q25 The Big 15The Building 15The Breakthrough 15The Booming 15 THEISG 15© 2025 Information Services Group, Inc. All Rights Reserved. Global Service & Software Provider Standouts Our ISG Contracts Database is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months.
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21© 2025 Information Services Group, Inc. All Rights Reserved. Service & Software Provider Standouts – GlobalThe ISG Contracts Database is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. * New or returning to leaderboard in quarterProviders in alphabetical order; no rankings implied. Revenues sourced from D&B and individual company financial fillings. The Big 15The Building 15The Breakthrough 15The Booming 15Revenues > $10BRevenues $3B-$10BRevenues $1B-$3BRevenues <$1B Managed Services Market AccentureCapgeminiDeloitteDXC TechnologyHCLTechIBM Consulting InfosysKyndrylNTT DataTCSWipro ConcentrixFoundeverGenpactLTIMindtree Sopra SteriaTech MahindraT-Systems CoforgeEXLGlobantL&T TechnologyMphasis Neusoft*Persistent SystemsSageWNS BirlasoftEltel NetworksEnsonoFirstsource SolutionsKPIT Technologies MastekSofttekTATA ElxsiTata Technologies*Transcom Worldwide* As-a-Service MarketAmazon Web ServicesGoogle CloudMicrosoftOracleApplovin*AtlassianAutodesk*CrowdStrike EquinixPalo Alto NetworksSnowflakeWorkday 21Vianet*DatabricksHubspotOVH*PalantirZscalerCyberark*DigitalOceanKingsoft CloudNemetschekVantage Data Centers | 3Q25
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22© 2025 Information Services Group, Inc. All Rights Reserved. Summary and OutlookSummaryMarket Outlook•Uncertainty continues to affect segments of the tech stack•U.S. economy showing mixed signals, with some sectors struggling while others are growing•Concerns around energy costs, tariffs and geopolitical risks continue in Europe•AI has sparked a new tech cycle, becoming a major driver of growth •ACV up 1.5% YTD, yet growth is not broad-based•Americas ACV up 15% YTD driven by gains in ITO, ER&D and BFSI•Americas has seen stepped-up activity in mega deals and smaller, discretionary work•EMEA and Asia each down YTD as few geographic markets are showing growth•Outside U.S., ITO/BPO and BFSI have yet to show signs of recovery •IaaS results surpass heightened expectations •Main concerns are capacity constraints and ROI associated with elevated CapEx •SaaS growing at a healthy pace, but sentiment is subdued •Will AI serve as a strategic enhancement or lead to disruptive displacement? Macro RecapManaged Services Revenue ForecastXaaS Market Segment2025 ForecastChange from Q2Managed Servies1.3%No changeAs-a-Service25%Raised 400 bps | 3Q25
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© 2025 Information Services Group, Inc. All Rights Reserved. Thank you! TheQuarterly92nd
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© 2025 Information Services Group, Inc. All Rights Reserved. Appendix
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25© 2025 Information Services Group, Inc. All Rights Reserved. 25© 2025 Information Services Group, Inc. All Rights Reserved. | 3Q25 Industry Verticals2025 YTDTrendsBusinessServices Travel, Transport LeisureFinancialServicesConsumer Packaged Goods& Retail ManufacturingEnergyHealthcare & PharmaTelecom & Media Combined Market12% 8%12% 15%8% 10% As-a-Service36% 30%27%32% 22%23% 29% 29% Managed Services 9%-16%-17% 20%9% -15% 23%5%13% -9%
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26© 2025 Information Services Group, Inc. All Rights Reserved. 26© 2025 Information Services Group, Inc. All Rights Reserved. Source: ISG, 2025; ACV = Annual Contract Value ACV $B | 3Q25 5.35.96.4 3Q242Q253Q25 Americas Broader Market Results Managed ServicesCombined Market 13.315.817.3 3Q242Q253Q25 As-a-Service 8.19.910.9 3Q242Q253Q25 25%YTD 32%YTD15%YTD 3Q25 ResultsCombined market ACV up 30% Y/YManaged services ACV up 22% Y/YXaaS ACV up 35% Y/Y2025 YTD ResultsCombined market ACV up $10B versus 2024Managed services ACV most ever at the nine-month markXaaS ACV growth of 32%, up versus 13% growth in 2024
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27© 2025 Information Services Group, Inc. All Rights Reserved. Service & Technology Provider Standouts – AmericasThe ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months.The Big 15The Building 15The Breakthrough 15The Booming 15Revenues > $10BRevenues $3B-$10BRevenues $1B-$3BRevenues <$1B Managed Services Market AccentureCapgeminiCognizantDeloitteDXC TechnologyHCLTech InfosysKyndrylNTT DataTCSWipro ABM IndustriesConcentrixEPAM SystemsFoundever GenpactLTIMindtreeTech Mahindra CoforgeEXLGlobantInnova SolutionsL&T Technology Services MphasisPersistent SystemsUnisysWNS BirlasoftEnsonoFirstsource SolutionsHGSHTC MastekPomeroySofttekSonata SoftwareTata Elxsi As-a-Service MarketAmazon Web ServicesGoogle CloudMicrosoftOracleApplovinAtlassianAutodeskCrowdStrike DatadogPalo Alto NetworksSnowflakeWorkday DatabricksHubSpotIron MountainPalantirShopifyZscalarCyberarkDigitalOceanGuidewireServiceTitanVantage Data Centers Providers in alphabetical order; no rankings implied. Revenues sourced from D&B and individual company financial fillings. | 3Q25
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28© 2025 Information Services Group, Inc. All Rights Reserved. 28© 2025 Information Services Group, Inc. All Rights Reserved. Source: ISG, 2025; ACV = Annual Contract Value ACV $B | 3Q25 EMEA Broader Market Results Combined Market 9.29.19.7 3Q242Q253Q25 As-a-Service 4.25.25.9 3Q242Q253Q25 Managed Services 5.13.83.8 3Q242Q253Q25 14%YTD 37%YTD-8%YTD 3Q25 ResultsCombined Market up 5% Y/YManaged Services fell below $4BXaaS ACV up 41%2025 YTD ResultsCombined Market ACV up 14% YTD; inline with 12% growth in 2024Managed Services ACV down 8%; Number of Contracts down 15% YTDXaaS ACV growth of 37%, up versus 15% growth in 2024
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29© 2025 Information Services Group, Inc. All Rights Reserved. Service & Technology Provider Standouts – EMEAThe ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. * New or returning to leaderboard in quarterProviders in alphabetical order; no rankings implied. Revenues sourced from D&B and individual company financial fillings. The Big 15The Building 15The Breakthrough 15The Booming 15Revenues > $10BRevenues $3B-$10BRevenues $1B-$3BRevenues <$1B Managed Services Market AccentureBTCapgeminiDXC TechnologyHCLTech IBM ConsultingInfosysKyndrylTCSWipro CapitaComputacenterConcentrixFoundeverGenpactIndra Sistemas LTIMindtreeSoftwareONESopra SteriaSwecoTech MahindraT-Systems adessoAFRYCancomCoforgeEXL L&T Technology ServicesPersistent SystemsReply SpASoftcat LimitedTelefonica Tech Datagroup SEEDAGEltel NetworksFirstsource SolutionsGFT TechnologiesKPIT Technologies MastekTata ElxsiTata TechnologiesTranscom WorldwideZensar As-a-Service MarketAmazon Web ServicesGoogle CloudMicrosoftOracleSAPAtlassianAutodeskEquinixDatabricksOVHSageVismaZscalerCyberarkDigitalOceanNermetschekTechnologyOne | 3Q25
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30© 2025 Information Services Group, Inc. All Rights Reserved. 30© 2025 Information Services Group, Inc. All Rights Reserved. Source: ISG, 2025; ACV = Annual Contract Value ACV $B | 3Q25 Asia-Pacific Broader Market Results3Q25 ResultsCombined market up 10% Y/YManaged services declined 9% Y/YXaaS ACV up 14% Y/Y2025 YTD ResultsCombined market ACV up 6%; slowest growth of the three regionsManaged services ACV down 26% with most geographic markets down XaaS ACV growth of 14% YTD, up versus 6% growth in 2024 5.25.35.7 3Q242Q253Q25 Combined MarketManaged Services 0.90.80.8 3Q242Q253Q25 As-a-Service 4.34.44.9 3Q242Q253Q25 6%YTD 14%YTD-26%YTD
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31© 2025 Information Services Group, Inc. All Rights Reserved. Service & Technology Provider Standouts – Asia Pacific The ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. The Big 15The Building 15The Breakthrough 15The Booming 15Revenues > $10BRevenues $3B-$10BRevenues $1B-$3BRevenues <$1B Managed Services Market AccentureCapgeminiHCLTechIBM Consulting InfosysTCSWipro FoundeverGenpactIT Holdings (TIS)ITOCHU Techno-SolutionsLG CNSNomura Research Sumitomo SCSKSodexoTech MahindraTranscosmos BiprogyChinaSoftCoforgeFPT SoftwareNCS NeusoftNS SolutionsPersistent SystemsSK C&CWNS BayCurrent ConsultingBeyondSoftBirlasoftData #3Firstsource Solutions KPIT TechnologiesSonata SoftwareTata ElxsiTata Technologies As-a-Service Market AlibabaAmazon Web ServicesBaiduChina Telecom Google CloudHuawei CloudMicrosoftOracle ApplovinAtlassianAutodeskDassault SystèmesEquinix21VianetCloudFlareMongoDBVeeva SystemsXeroAirTrunkCtrlS DatacentersGlobal SwitchKingdeeKingsoft CloudNextDC *New or returning to leaderboard in quarterProviders in alphabetical order; no rankings implied. Revenues sourced from D&B and individual company financial fillings. | 3Q25
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isg-one.com 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.