Fueled by AI, Tech Spending Continues to Soar in the Americas, Q3 ISG Index Finds

Shrugging off macro uncertainty and driven by interest in AI, enterprises in the Americas accelerated their spending on technology services and software in the third quarter, according to the latest state-of-the-industry report from Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.

The Americas ISG Index, which measures commercial outsourcing contracts with annual contract value (ACV) of $5 million or more, shows third-quarter ACV for the combined market—including both cloud-based as-a-service (XaaS) and managed services—reached a record $17.3 billion, up 30 percent, the region’s highest growth rate in more than three years.

“The Americas market is roaring right now,” said Todd Lavieri, ISG vice chairman and president of ISG Americas and Asia Pacific. “Enterprises are investing in both long-term transformation initiatives and discretionary projects. They are accelerating their move to the cloud to realize their AI goals, while embracing managed services to optimize their costs and reinvest the savings in new initiatives. Not much is holding them back at the moment.”

Regarding the new H1-B visa policy, Lavieri said the impact of the new $100,000 fee will be muted. “There will be some operational uncertainty in the near term, but the market will adjust. Enterprises are already deep into automation and AI adoption across delivery functions, and this policy will likely accelerate that trend.”

Third-Quarter Results by Segment

ACV for the as-a-service (XaaS) segment climbed 35 percent, to a record $10.9 billion. It was the sixth straight quarter the XaaS market achieved double-digit growth year over year, averaging 29 percent during that span. Within XaaS, infrastructure-as-a-service (IaaS) ACV jumped 42 percent, to $7.9 billion, while software-as-a-service (SaaS) advanced 18 percent, to $2.9 billion.

Managed services ACV rose 22 percent, to a record $6.4 billion, its best quarterly growth rate since the third quarter of 2023. The latest quarter marked the fourth straight quarter of managed services growth, a streak last seen in 2022.

Within managed services, IT outsourcing (ITO) rose 25 percent, to $5.2 billion, led by growth in application development and maintenance (ADM) services and ADM combined with infrastructure services. ACV for business process outsourcing (BPO) rose 4 percent, to $988 million, with growth in facilities management, HR and industry-specific services. Engineering, research and development (ER&D) jumped 35 percent, to $243 million.