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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
As the leader of ISG’s business in EMEA and an Executive Board Member, Steve provides strategic insight and advice to help ISG’s clients solve their most critical business challenges, helping them adopt and optimize the technology and operating models they need to compete successfully. In particular, he uses his long experience and broad expertise to challenge and inspire them to think about their risks and opportunities in new and unexpected ways.
Past achievements for clients
Steve leads his team’s engagement with clients with an industry-recognized and highly valued perspective on the most important trends in business and technology. He asks and answers the big questions: Why do you need to transform? What’s your best way forward? What do you need to accelerate? And where should you invest your technology dollars to make it all happen?
Among his many client success stories, his ability to take in the big picture, define the problem and connect the dots to the right solutions helped one legacy postal and shipping giant transform itself into a modern logistics powerhouse. He also guided a global energy industry leader through a complex operating model and IT provider transition, helping them see past the obvious cost cutting measures to identify the root causes of their challenges—and delivering savings far beyond what they had imagined.
