III News & Events

Information Services Group has launched a research study examining providers that enable enterprises to adopt next-generation application development and maintenance capabilities based on advanced AI tools. The study results will be published in a series of comprehensive ISG Provider Lens reports, called AI-driven ADM Services, scheduled to be released in September 2026. The reports will cover companies offering services spanning AI enablement for application development outsourcing, project-based application development, managed services and quality assurance. Enterprise buyers will be able to use information from the reports to evaluate their current vendor relationships, potential new engagements and available offerings, while ISG advisors use the information to recommend providers to the firm's buy-side clients. Application development and maintenance services are entering a new phase as enterprises integrate AI and GenAI more deeply into software delivery. Organizations are seeking measurable improvements in efficiency, reliability and responsiveness and increasingly expect providers to embed AI into scalable delivery models for development, testing and application operations. At the same time, governance, security, traceability and quality assurance are becoming more important as enterprises recognize the importance of managing risk amid transformation. ISG has distributed surveys to nearly 200 providers of AI-driven ADM services. Working in collaboration with ISG's global advisors, the research team will produce six quadrants representing the AI-enabled ADM services that enterprises are buying, based on ISG's experience working with its clients. The six quadrants are: Application Development Outsourcing, evaluating providers delivering large-scale outsourced application development services that apply AI across the software development lifecycle through disciplined delivery models. Application Development Projects, assessing providers using AI to accelerate project-based application development and modernization with defined scope and timelines. Application Managed Services - GSIs, covering global systems integrators delivering AI-enabled managed services for large and complex application portfolios. Application Managed Services - SIs, evaluating specialist providers delivering application managed services with deep expertise in specific technologies, platforms, regions or industries. Application Quality Assurance, assessing providers delivering quality assurance and quality engineering services that use AI-driven testing, analytics and controls across the application lifecycle. Continuous Testing Specialists, covering providers that specialize in continuous testing and verification for modern continuous integration and continuous delivery environments, including validation of AI-assisted development outputs.

Reports Q1 revenue $61.2M, consensus $60.8M. The company said, "ISG delivered a strong first quarter, with revenue of $61.2 million, up 3 percent, and adjusted EBITDA of $8.3 million, up 12 percent-both at the top end of guidance-with adjusted EBITDA margins expanding more than 100 basis points from the prior year, to 13.5 percent. Revenue growth was driven primarily by Europe, up 25 percent, and recurring revenues, up 9 percent, as AI continues to be a tailwind for our firm. Adding to our recurring revenue acceleration, we signed the largest single client contract in our history - a multiyear agreement valued at up to $17 million to provide governance services for a top global manufacturer. Under this landmark contract, ISG will manage $300 million in global technology spend with 200 technology vendors to support a large-scale, multiyear AI-powered transformation. This contract and our growing profitability reflect our unique strengths as an AI-centered research and advisory powerhouse that engages strategically with clients, provides deeper insights to shape client solutions and decisions, and, importantly, delivers unmatched execution and AI governance at scale."

The company said, "Clients remain somewhat cautious in the face of current macro and geopolitical conditions and as a result are focusing on cost optimization and preparing for enterprise-scale adoption of AI, which play to ISG strengths. We see current demand trends continuing. ISG is targeting revenues between $62.5 million and $63.5 million and adjusted EBITDA of between $8.0 million and $9.0 million, which will continue our year-over-year growth. We will monitor the macroeconomic environment, including the impact of FX, inflation and other factors, and adjust our business plans accordingly."