Spending on technology services in the Americas rose at its fastest pace in four years to a record high in the first quarter, fueled by strong demand for AI, the latest state-of-the-industry report from Information Services Group, a global AI-centered technology research and advisory firm, shows.
The Americas ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of $5 million or more, shows first-quarter ACV for the combined market—including both managed services and cloud-based as-a-service (XaaS)—surpassed $20 billion for the first time, reaching $20.2 billion, up 35 percent from a year ago, the region’s fastest growth since the first quarter of 2022. Versus the fourth quarter of 2025, the combined market was up 14 percent.
“The Americas market is being driven almost entirely by AI, as enterprises accelerate their spending on the cloud infrastructure services needed to support their AI ambitions,” said Todd Lavieri, vice chairman and president of ISG Americas and Asia Pacific. “What growth there is in managed services came from enterprises looking to optimize their cost base so they can invest the savings primarily in AI-driven digital transformation.”
Lavieri noted macroeconomic and geopolitical factors do not appear to be weighing on the sector. “Right now, nothing can slow the demand for AI. Cloud providers are investing hundreds of billions of dollars in data center capacity ahead of demand, with enterprises seeing AI as the key to future success, both in terms of margin expansion and topline growth. Nobody wants to miss the boat.”
First-Quarter Results by Segment
ACV for XaaS was up 55 percent, to $14.5 billion, only the third time it has exceeded $10 billion in a quarter. It was the eighth straight quarter that XaaS has generated double-digit growth versus the prior year, averaging 34 percent in that span. The 55 percent growth rate in the first quarter was the highest seen since the third quarter of 2015—in the early days of the cloud computing era.
Within this segment, ACV for infrastructure-as-a-service (IaaS) soared 77 percent versus the prior year, to $11.5 billion, while software-as-a-service (SaaS) advanced 5 percent, at $3.0 billion.
The managed services segment, meanwhile, generated first-quarter ACV of $5.7 billion, up 1.2 percent from the prior year and up 3 percent from the fourth quarter, when growth fell into negative territory. Managed services has trended to the upside in five of the last six quarters.
Within managed services, IT outsourcing (ITO) ACV rose 3 percent, to $4.5 billion, driven by triple-digit growth in bundled infrastructure and application development and maintenance (ADM) services. Standalone ADM services, the biggest piece of the ITO pie, rose 3 percent. Business processing outsourcing (BPO) ACV advanced 22 percent, to $1.0 billion, with strong growth in facilities management and industry-specific services. Engineering, research and development (ER&D) services, meanwhile, was down 56 percent, to $189 million.
A total of 398 managed services contracts were signed in the first quarter, down 1 percent versus a year ago, the region’s second straight quarterly decline, year over year. Two mega deals (contracts with ACV of $100 million or more) were awarded in the first quarter, down from three in the prior year, with mega-deal ACV down 5 percent from a year ago. The ACV of new scope awards advanced 23 percent from the prior year, to $4 billion, the fourth consecutive quarter above this level. Meanwhile, the number of smaller deals—those valued at between $5 million and $9 million—declined 8 percent versus the prior year, marking the third time in the last four quarters this segment has seen year-over-year declines.
By industry, top gainers included retail (up 130 percent) and consumer package goods (up 34 percent). The region’s two largest industries for outsourcing—banking, financial services and insurance (BFSI) and manufacturing—were up 7 percent and 17 percent, respectively.
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