Hello. This is Stanton Jones, Steve Hall and Doug Saylors with a special edition of the Index Insider focused on the conflict in the Middle East and what it means for ISG clients.
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Background
The conflict in the Middle East remains fluid. Beyond the immediate security implications, there are second-order effects on the global technology and services ecosystem that warrant attention, including:
- Elevated cyber activity across the region, including DDoS campaigns and intrusion attempts on both digital and physical infrastructure.
- Cloud resiliency questions where redundancy is concentrated within a single geographic zone.
- Aviation and logistics disruptions that could affect the movement of personnel.
- Volatility in shipping and energy, which could impact both infrastructure and data centers.
From a services perspective, the Middle East represents a small share of global IT and business services contract value, roughly 1% in annual contract value (ACV) terms. Most of that demand is concentrated in sovereign-backed transformation programs in energy, financial services, telecom and smart infrastructure initiatives. Demand for GCCs based in India is growing but remains nascent.
Software exposure in the region is more material. Israel maintains an outsized footprint in cybersecurity, AI and cloud infrastructure, with major U.S. and European technology firms operating significant engineering centers there.
Recommendations
Given how quickly the situation is evolving and the global nature of the conflict, ISG clients with exposure to the region should consider:
- Conducting a dependency-mapping exercise covering cloud regions, dev centers, SOC/NOC locations, and key subcontractors with Middle East exposure.
- Re-running BCP/DR assumptions, incorporating increased cyber activity along with travel disruption scenarios.
- Ensuring network redundancy to mitigate DDoS attacks and watching closely for signs of data exfiltration. Be prepared to shut down external access, including APIs and third-party connections, using an accelerated decision authority.
- Reviewing lessons learned from the pandemic and Eastern Europe. This could include quickly moving to remote work and/or being prepared to shift services out of the region, if needed.
The ISG Index Insider Team
About the authors
Stanton Jones
Stanton helps enterprise technology leaders, IT service providers and buy- and sell-side professionals make sense of the global IT services sector. Stanton's weekly briefing - the Index Insider - is read by thousands of industry stakeholders each week.
Steve Hall
Steve is Chief AI Officer 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.
