Monday Morning Impact – February 9
ISG: Global Technology Demand Reaches Record High in Q4, Fueled by AI
Global spending on technology services and software reached a record high in the fourth quarter, as demand for AI continued to propel the market upward, according to a recent report from Information Services Group (ISG), a Stamford, Connecticut-based technology research and advisory firm.
Data from the ISG Index, which measures commercial outsourcing contracts with annual contract value (ACV) of $5 million or more, show fourth-quarter ACV for the combined global market (both managed services and cloud-based services) at a record $34.3 billion, up 16 percent versus the prior year. It was the sixth consecutive quarter the combined market posted double-digit growth year over year, averaging nearly 18 percent growth in that span.
The pace of growth, however, has decelerated somewhat over the last four quarters, slowing from 21 percent year-over-year growth in the fourth quarter last year.
All the growth in this year’s fourth quarter came from record spending on cloud-based software and services (XaaS), according to the report. The XaaS market had its best quarter ever, generating $23.4 billion of ACV, up 26 percent from the prior year, but down slightly from the 30 percent growth rate XaaS recorded in the third quarter. Within this segment, infrastructure-as-a-service (IaaS) soared 32 percent, to $18.5 billion, while software-as-a-service (SaaS) grew 6 percent, to $4.9 billion.
“Spending on cloud, software and consumption-based services continues to drive the overall market, with strong demand for AI at its core,” said Steve Hall, the firm’s chief AI officer. “Growth is particularly strong in infrastructure services, fueled by AI workloads, data platform expansion and enterprise cloud modernization. SaaS also delivered a solid performance in 2025, with growth across collaboration, IT service management, analytics and cybersecurity.”
The managed services market, meanwhile, was essentially flat in the fourth quarter, generating $10.9 billion of ACV, down 0.3 percent from the prior year. During the fourth quarter, 727 managed services contracts were awarded, down 2.5 percent from the prior year.
“While managed services growth was constrained in 2025, there are positive signals that bode well for the longer term,” Hall said. “Deal durations are up 14 percent while TCV (total contract value) is up 8 percent for the full year, as enterprises focus on hyper transformation aimed at delivering cost savings and greater efficiency through AI. Such broadscale transformation takes time.”
Combined market ACV for the full year was a record $127.4 billion, up 18 percent from the prior year, the highest annual growth rate since 2021. The ACV of cloud-based services reached a record $84.0 billion, up 29 percent, with IaaS up 33 percent, to $64.7 billion, and SaaS up 16 percent, to $19.3 billion. XaaS now accounts for 66 percent of combined-market ACV, up from 60 percent in 2024.
Managed services ACV grew 1.3 percent, its slowest growth rate since 2020, to a record $43.4 billion. Demand slowed from the average 5 percent growth of the previous three years. ITO was up 2.4 percent, at $32.5 billion, and ER&D advanced 35 percent, to $3.6 billion, while BPO slumped 14 percent, to $7.3 billion.
A total of 2,954 managed services contracts were awarded in 2025, up slightly (0.5 percent) from the prior year. Among them were 28 mega-deals, down from 32 in 2024. Meanwhile, the number of new-scope awards (2,058) was up 6 percent and new-scope ACV ($29 billion) was up 7.5 percent from the prior year, each at record highs.
For the full year of 2026, ISG is forecasting 2.1 percent revenue growth for managed services, and 20 percent revenue growth for cloud-based software and services (XaaS), the latter supported by continuing cloud migration, AI adoption, cybersecurity investment and platform-led consumption.
Channel Impact®
The report shows that 2025 was a solid year for the outsourcing market. Growth was concentrated in cloud, infrastructure, engineering and AI-related demand, while more traditional, labor-centric services remained under pressure.
Cisco Launches New Partner Program for the AI Era
Cisco has announced the launch of the Cisco 360 Partner Program geared towards developers, consultants, managed services providers, resellers, and other partner business models competing in the areas of AI-ready data centers and related technologies.
Resources include new rebates, a “Partner Value Index (PVI),” development funds, and an “AI Assistant.” Partner locators and an AI readiness index are also in the mix.
The PVI is Cisco’s main measurement framework which will soon add dedicated indexes for developers/advisors, mass-Scale infrastructure specialists, and distributors with tailored learning paths and opportunities for these partner types. A redesigned Cisco AI Assistant promises a more intuitive user experience.
“The Cisco 360 Partner Program was designed with partners to foster collective success, enable differentiation, and help partners scale with confidence,” said Elisabeth De Dobbeleer, senior vice president with the Cisco Partner Program. “It’s about making our ecosystem’s unique value clear to the market and our customers.”
The company is also introducing a revised bonus structure, focusing on One Cisco including the new Secure Networking and Secure AI Infrastructure specializations. These temporary bonuses will expire at the end of July 2026. In addition, a new distributor development fund is designed to drive stronger alignment between Cisco and its distributor network.
Channel Impact®
The new program is intended to enable partners to differentiate and grow their offerings while helping customers reach transformative AI outcomes faster.
GTT Unveils New AI-Powered Configure-to-Order Capabilities
GTT Communications Inc., an Arlington Virginia-based company focused on networking and security as a service for multinational organizations, has added new capabilities and streamlining to its GTT EnvisionDX orchestration portal.
Key features include self-service configuration, on-demand quoting and ordering, GenAI-powered address validation, enhanced quote visibility, and collaborative quote/order management. Additionally, the platform includes simplified creation of new networks and addition of new sites to existing networks with secure access via Active Directory; secure SSO; Bring Your Own Identity; two-factor authentication; and an API-first design that enables partners to embed features in their own tools.
“As the technology services distributor channel community continues to expand globally, GTT EnvisionDX provides a quick and simple way to configure, price and quote for our joint customers, anytime, for any location,” said Mark de Haan, Senior Vice President, EMEA and APAC, GTT. “Additionally, in conjunction with our ongoing deployment of AI capabilities, our channel partners and customers gain enhanced visibility for a better service experience.”
Channel Impact®
The new GTT EnvisionDX channel partner experience is intended to address many of the challenges partners face during quoting processes, including incomplete data, lack of visibility of options by site and limited quote status, resulting in delayed quotes, sales and revenues, as well as lost productivity.
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