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Enterprises Seek More Innovation, AI Value from Service Providers, ISG Study Shows

1. Most enterprises are dissatisfied with IT outsourcing innovation, specifically in AI services. 2. Only one-third are happy with providers' deployment of emerging tech. 3. More than 90% trust ITO and BPO providers' ethics around AI use. 4. 62% of companies concerned about costs related to AI services. 5. Providers must enhance capabilities to align with client expectations.

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FAQ

Why Bearish?

The dissatisfaction reported by enterprises suggests a potential decrease in demand for ISG's services, which could negatively impact prices. Historical trends have shown that perceived underperformance, especially in high-stakes areas like AI, can lead to declining investor confidence and stock prices.

How important is it?

The article covers key issues influencing service satisfaction and potential revenue decline for ISG, making it relevant to their current operations and stock price outlook. Strong dissatisfaction in innovation and cost concerns directly influences their service model and client retention strategies.

Why Short Term?

The immediate concerns reflect the current service landscape, which can lead to rapid shifts in client retention and market perception. Recent downturns in similar firms following negative performance evaluations serve as precedents.

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-Companies say providers are identifying use cases for AI and analytics, but many are concerned about cost of services, ISG Star of Excellence™ CX Insights Report finds STAMFORD, Conn.--(BUSINESS WIRE)--Enterprises say they want service providers to be more innovative and better at advancing strategic goals, while giving them mixed reviews on AI projects, according to new survey research from Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.As enterprises adopt AI while navigating ongoing economic changes, they rely on skilled strategic partners more than ever. Providers need to strengthen some of their capabilities to meet clients’ expectations.Share The latest ISG Star of Excellence™ CX Insights Report, a quarterly review that sheds light on what enterprise buyers think about their service and solution providers, is the first to use a new, concise format that highlights key survey findings in all major pillars of provider performance. It finds that companies give providers high marks in most areas, especially compliance with policies and regulations. However, many see room for improvement in helping companies capture opportunities and address difficult business conditions. “As enterprises adopt AI while navigating ongoing economic changes, they rely on skilled strategic partners more than ever,” said Namratha Dharshan, chief business leader, ISG, and principal analyst on the study. “Providers need to strengthen some of their capabilities to meet clients’ expectations.” Nearly 65 percent of enterprises are dissatisfied or only moderately satisfied with providers finding ways to innovate in IT outsourcing (ITO) services, the report says. Only one-third were highly satisfied with ITO providers’ help in widely deploying emerging technologies. Business process outsourcing (BPO) services were rated only slightly better. Fewer than half of enterprises overall said providers have been pivotal partners in expansion strategies, such as entering new markets or generating additional revenue. The report highlights clients’ ratings of AI services, which are increasingly important to many enterprises but need improvement in some areas. On the bright side, most companies believe their ITO and BPO providers are ethical and responsible in their use of AI: More than 90 percent are highly or moderately satisfied in this area. Most also say their providers have done a good job identifying processes and operations in which to apply AI. However, less than half are highly satisfied with AI services overall, and they are concerned about how much they pay for those services, ISG says. A majority of enterprises are dissatisfied with providers’ ability to hire the resources to deliver AI and analytics services. Nearly half are less than highly satisfied with provider communication about workloads and timelines for AI and analytics projects. Amid these concerns, more than two-thirds are dissatisfied or moderately satisfied with the cost of AI services. “Enterprises see AI as a way to reduce costs, yet the services they use to integrate and scale AI solutions are significant cost centers,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “The long-term growth of AI will depend on resolving this paradox.” In the face of rapid economic and geopolitical change, companies also want providers to be more strategic and flexible business partners, the report says. About 47 percent of enterprises using ITO services are dissatisfied or moderately satisfied with their providers’ ability to adapt to changes in demand due to external economic and global factors. The report also highlights a wide range of other findings, including concerns about providers’ consistent execution and delivery, quality of BPO work and handling of project milestones and handoffs. About ISG Star of Excellence™ CX Insights Research CX scores reported in the ISG Star of Excellence™ CX Insights Report represent the weighted average of client satisfaction scores and importance scores across six dimensions: Execution and Delivery, Governance and Compliance, Collaboration and Transparency, Innovation and Thought Leadership, People and Cultural Fit, and Business Continuity and Flexibility. Through ISG’s continuous Voice of the Customer survey research, customers are asked to rate the importance of each of the six dimensions and then rate their service provider/vendor on each, on a scale of 1-100. CX scores are also generated across industries, regions and technology domains and for each service provider/vendor. ISG Star of Excellence™ CX Insights scores are an integral part of the provider assessments offered by ISG Provider Lens™ research, the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. The Q1 2025 ISG Star of Excellence™ CX Insights Report is available as a free download from this webpage, with more detailed findings, including by provider, available by contacting ISG. Enterprises who wish to participate in the ISG Voice of the Customer survey research can begin the process by visiting this website. Providers also can nominate their customers to participate. About ISG 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. More News From Information Services Group, Inc.

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