European Cloud Services Market Grows 30% Driven by AI Demand
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
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Should l Buy III?
Source: Newsfilter
- Significant Market Growth: According to the Information Services Group (ISG) report, the European cloud infrastructure services market grew by 30% in Q1, reaching a record $12.2 billion, indicating strong AI-driven demand as businesses accelerate digital transformation to optimize costs and drive AI strategies.
- Robust Infrastructure Services: Infrastructure-as-a-Service (IaaS) surged 72% in Q1 to $6.1 billion, marking the highest quarterly growth rate in over seven years, reflecting a surge in demand for cloud services and further solidifying ISG's leadership position in the market.
- Managed Services Performance: Managed services' annual contract value (ACV) rose nearly 6% in Q1 to $4.7 billion, marking the second consecutive quarter for EMEA to exceed $4 billion, demonstrating sustained demand for outsourcing services amid AI investment trends.
- Growing AI Impact: The newly launched ISG AI Index indicates that IaaS has seen the greatest impact from AI, with a 160% increase, while Software-as-a-Service (SaaS) rose by 53%, showcasing how AI technology is profoundly transforming the technology and business services landscape.
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Analyst Views on III
Wall Street analysts forecast III stock price to rise
1 Analyst Rating
1 Buy
0 Hold
0 Sell
Moderate Buy
Current: 4.330
Low
6.50
Averages
6.50
High
6.50
Current: 4.330
Low
6.50
Averages
6.50
High
6.50
About III
Information Services Group, Inc. is a global artificial intelligence (AI)-centered technology research and advisory firm. The Company specializes in digital transformation services, including sourcing advisory, cloud and data analytics; managed governance and risk services, network carrier services, technology strategy and operations design; change management, and market intelligence and technology research and analysis. The Company’s ISG Network and Software Advisory services and its software platforms, including ISG GovernX and ISG Tango. ISG GovernX includes real-time third-party risk management capabilities, including integrated data feeds and real-time alerts. ISG Tango sourcing platform is an AI-embedded, comprehensive solution that enables enterprises and public sector organizations to evaluate their business requirements and identify desired outcomes. Its AI Maturity Index, a data-driven assessment platform designed to benchmark workforce readiness for AI at scale.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Kyndryl Recognized as Leader in Mainframe Services
- Industry Leadership: Kyndryl has been recognized as a leader in three categories in the 2026 ISG Provider Lens™ Mainframes — Services and Solutions Report, including Mainframe Technology Consulting, Mainframe as a Service (MFaaS), and Application Modernization Services, highlighting its expertise in mission-critical enterprise technology services.
- Enhanced Modernization Capabilities: By leveraging AI-driven discovery and automation technologies, Kyndryl supports enterprises in modernizing mainframe environments without compromising resilience, enabling clients to achieve predictable economics and operational agility, thus driving business transformation.
- Investment and Partnerships: The company continues to invest in workforce development and ecosystem partnerships, ensuring resilient modernization pathways for regulated industries, which further solidifies its competitive position in the market.
- Customer Demand Response: Kyndryl's comprehensive mainframe consulting services can support discrete projects and multi-year transformations, addressing clients' urgent needs for modernized mainframe environments while combining deep mainframe expertise with strong governance to enhance clients' modernization readiness.
See More
European Cloud Services Market Grows 30% Driven by AI Demand
- Significant Market Growth: According to the Information Services Group (ISG) report, the European cloud infrastructure services market grew by 30% in Q1, reaching a record $12.2 billion, indicating strong AI-driven demand as businesses accelerate digital transformation to optimize costs and drive AI strategies.
- Robust Infrastructure Services: Infrastructure-as-a-Service (IaaS) surged 72% in Q1 to $6.1 billion, marking the highest quarterly growth rate in over seven years, reflecting a surge in demand for cloud services and further solidifying ISG's leadership position in the market.
- Managed Services Performance: Managed services' annual contract value (ACV) rose nearly 6% in Q1 to $4.7 billion, marking the second consecutive quarter for EMEA to exceed $4 billion, demonstrating sustained demand for outsourcing services amid AI investment trends.
- Growing AI Impact: The newly launched ISG AI Index indicates that IaaS has seen the greatest impact from AI, with a 160% increase, while Software-as-a-Service (SaaS) rose by 53%, showcasing how AI technology is profoundly transforming the technology and business services landscape.
See More
Databricks Empowers Enterprises for Scalable AI Deployment
- Unified Data Platform: An increasing number of enterprises are adopting the Databricks platform, leveraging the Lakehouse architecture to unify data environments, addressing fragmentation and rising AI adoption costs, thereby enhancing decision-making efficiency and business responsiveness.
- Accelerated AI Integration: Organizations are utilizing Databricks' capabilities such as MLflow and Mosaic AI to expand AI from pilot programs to enterprise-wide deployments, significantly improving workflow efficiency and the effectiveness of data analytics, helping businesses tackle macroeconomic challenges.
- Strengthened Governance and Compliance: In the face of growing regulatory pressures, enterprises are implementing fine-grained access controls and data lineage tracking through Databricks to ensure compliance and accountability, while optimizing cloud resource usage and enhancing cost visibility.
- Critical Role of Service Providers: The ISG report highlights the essential role of service providers in helping organizations optimize Databricks capabilities, driving strategic goals in the integration of data, AI, and governance.
See More
GenAI and Agentic AI Reshape Transformation Methods, ISG Report Says
- Modernization Strategy Shift: According to ISG's report, U.S. enterprises are shifting their modernization strategies towards business-led transformation, leveraging AI to interpret legacy systems, thereby maintaining operational continuity and enhancing agility in complex environments.
- AI-Driven Operations: Many companies are embedding AI-driven operations and automation into mainframe environments, utilizing enhanced AIOps for predictive monitoring and self-healing capabilities, significantly reducing downtime and manual intervention, thus improving system reliability.
- DevOps Standardization: U.S. enterprises are standardizing DevOps pipelines and API-enabled architectures to integrate mainframes with distributed systems, accelerating code release speed and improving consistency, which supports incremental modernization without disrupting critical workloads.
- Role of Service Providers: The ISG report highlights the crucial role of service providers in enabling secure, phased transformation, combining AI with structured modernization practices to achieve faster business outcomes while maintaining control over operations.
See More
European Enterprises Embrace AI-Enhanced Mainframe Modernization
- AI-Driven Workflows: The ISG report indicates that European enterprises are increasingly integrating generative AI (GenAI) into standardized workflows during mainframe modernization, utilizing AI-driven workflows built on deterministic engines to coordinate analysis, rule explanation, and test creation, thereby enhancing efficiency and accuracy.
- Data Sovereignty and Compliance: Organizations are placing greater emphasis on data sovereignty and regulatory demands during modernization, expecting clear evidence-based assurances regarding data storage locations, workload operations, and encryption key access, which enhances trust in AI platforms.
- Incremental Modernization Strategy: European enterprises are shifting from large-scale, one-time mainframe replacements to gradual, carefully managed modernization programs to reduce risk and maintain compliance, allowing core systems to remain stable while avoiding disruptions caused by a shortage of specialized skills.
- Cautious Human-AI Collaboration: While increasingly utilizing GenAI in mainframe modernization, enterprises are adopting a cautious approach, especially in critical systems, emphasizing human review and decision documentation at key stages to mitigate risks and ensure accuracy.
See More
Global Technology Services Market Hits Record Growth
- Record Market Value: The global technology services market achieved a first-quarter annual contract value (ACV) of $39.4 billion, marking a 29% year-over-year increase, the highest growth rate in four years, indicating sustained demand for cloud and managed services that drives market expansion.
- AI-Driven Growth: ISG has raised its 2026 XaaS growth forecast to 25%, reflecting a surge in enterprise investment in AI infrastructure, which is expected to propel sustained growth in the coming years, particularly in the Infrastructure as a Service (IaaS) sector.
- New AI Index Launch: The newly launched ISG AI Index reveals a significant impact of AI on technology services, with the overall index up 77% since the end of 2022, and IaaS soaring by 160%, indicating that AI is reshaping market dynamics and accelerating digital transformation for enterprises.
- Managed Services Recovery: After two quarters of decline, managed services rebounded with an ACV of $11.2 billion, up 3% year-over-year, while IT outsourcing (ITO) saw a slight dip; however, business process outsourcing (BPO) achieved a robust 62% growth, highlighting strong demand for industry-specific services.
See More
Kyndryl Recognized as Leader in Mainframe Services
- Industry Leadership: Kyndryl has been recognized as a leader in three categories in the 2026 ISG Provider Lens™ Mainframes — Services and Solutions Report, including Mainframe Technology Consulting, Mainframe as a Service (MFaaS), and Application Modernization Services, highlighting its expertise in mission-critical enterprise technology services.
- Enhanced Modernization Capabilities: By leveraging AI-driven discovery and automation technologies, Kyndryl supports enterprises in modernizing mainframe environments without compromising resilience, enabling clients to achieve predictable economics and operational agility, thus driving business transformation.
- Investment and Partnerships: The company continues to invest in workforce development and ecosystem partnerships, ensuring resilient modernization pathways for regulated industries, which further solidifies its competitive position in the market.
- Customer Demand Response: Kyndryl's comprehensive mainframe consulting services can support discrete projects and multi-year transformations, addressing clients' urgent needs for modernized mainframe environments while combining deep mainframe expertise with strong governance to enhance clients' modernization readiness.
See More
European Cloud Services Market Grows 30% Driven by AI Demand
- Significant Market Growth: According to the Information Services Group (ISG) report, the European cloud infrastructure services market grew by 30% in Q1, reaching a record $12.2 billion, indicating strong AI-driven demand as businesses accelerate digital transformation to optimize costs and drive AI strategies.
- Robust Infrastructure Services: Infrastructure-as-a-Service (IaaS) surged 72% in Q1 to $6.1 billion, marking the highest quarterly growth rate in over seven years, reflecting a surge in demand for cloud services and further solidifying ISG's leadership position in the market.
- Managed Services Performance: Managed services' annual contract value (ACV) rose nearly 6% in Q1 to $4.7 billion, marking the second consecutive quarter for EMEA to exceed $4 billion, demonstrating sustained demand for outsourcing services amid AI investment trends.
- Growing AI Impact: The newly launched ISG AI Index indicates that IaaS has seen the greatest impact from AI, with a 160% increase, while Software-as-a-Service (SaaS) rose by 53%, showcasing how AI technology is profoundly transforming the technology and business services landscape.
See More
Databricks Empowers Enterprises for Scalable AI Deployment
- Unified Data Platform: An increasing number of enterprises are adopting the Databricks platform, leveraging the Lakehouse architecture to unify data environments, addressing fragmentation and rising AI adoption costs, thereby enhancing decision-making efficiency and business responsiveness.
- Accelerated AI Integration: Organizations are utilizing Databricks' capabilities such as MLflow and Mosaic AI to expand AI from pilot programs to enterprise-wide deployments, significantly improving workflow efficiency and the effectiveness of data analytics, helping businesses tackle macroeconomic challenges.
- Strengthened Governance and Compliance: In the face of growing regulatory pressures, enterprises are implementing fine-grained access controls and data lineage tracking through Databricks to ensure compliance and accountability, while optimizing cloud resource usage and enhancing cost visibility.
- Critical Role of Service Providers: The ISG report highlights the essential role of service providers in helping organizations optimize Databricks capabilities, driving strategic goals in the integration of data, AI, and governance.
See More
GenAI and Agentic AI Reshape Transformation Methods, ISG Report Says
- Modernization Strategy Shift: According to ISG's report, U.S. enterprises are shifting their modernization strategies towards business-led transformation, leveraging AI to interpret legacy systems, thereby maintaining operational continuity and enhancing agility in complex environments.
- AI-Driven Operations: Many companies are embedding AI-driven operations and automation into mainframe environments, utilizing enhanced AIOps for predictive monitoring and self-healing capabilities, significantly reducing downtime and manual intervention, thus improving system reliability.
- DevOps Standardization: U.S. enterprises are standardizing DevOps pipelines and API-enabled architectures to integrate mainframes with distributed systems, accelerating code release speed and improving consistency, which supports incremental modernization without disrupting critical workloads.
- Role of Service Providers: The ISG report highlights the crucial role of service providers in enabling secure, phased transformation, combining AI with structured modernization practices to achieve faster business outcomes while maintaining control over operations.
See More
European Enterprises Embrace AI-Enhanced Mainframe Modernization
- AI-Driven Workflows: The ISG report indicates that European enterprises are increasingly integrating generative AI (GenAI) into standardized workflows during mainframe modernization, utilizing AI-driven workflows built on deterministic engines to coordinate analysis, rule explanation, and test creation, thereby enhancing efficiency and accuracy.
- Data Sovereignty and Compliance: Organizations are placing greater emphasis on data sovereignty and regulatory demands during modernization, expecting clear evidence-based assurances regarding data storage locations, workload operations, and encryption key access, which enhances trust in AI platforms.
- Incremental Modernization Strategy: European enterprises are shifting from large-scale, one-time mainframe replacements to gradual, carefully managed modernization programs to reduce risk and maintain compliance, allowing core systems to remain stable while avoiding disruptions caused by a shortage of specialized skills.
- Cautious Human-AI Collaboration: While increasingly utilizing GenAI in mainframe modernization, enterprises are adopting a cautious approach, especially in critical systems, emphasizing human review and decision documentation at key stages to mitigate risks and ensure accuracy.
See More
Global Technology Services Market Hits Record Growth
- Record Market Value: The global technology services market achieved a first-quarter annual contract value (ACV) of $39.4 billion, marking a 29% year-over-year increase, the highest growth rate in four years, indicating sustained demand for cloud and managed services that drives market expansion.
- AI-Driven Growth: ISG has raised its 2026 XaaS growth forecast to 25%, reflecting a surge in enterprise investment in AI infrastructure, which is expected to propel sustained growth in the coming years, particularly in the Infrastructure as a Service (IaaS) sector.
- New AI Index Launch: The newly launched ISG AI Index reveals a significant impact of AI on technology services, with the overall index up 77% since the end of 2022, and IaaS soaring by 160%, indicating that AI is reshaping market dynamics and accelerating digital transformation for enterprises.
- Managed Services Recovery: After two quarters of decline, managed services rebounded with an ACV of $11.2 billion, up 3% year-over-year, while IT outsourcing (ITO) saw a slight dip; however, business process outsourcing (BPO) achieved a robust 62% growth, highlighting strong demand for industry-specific services.
See More
