Companies form broader partnerships to turn application development, maintenance into engines of innovation, competitiveness, ISG Provider Lens^® report says

U.S. enterprises are changing the way they carry out application development and maintenance (ADM), including closer engagement with service providers, as AI opens up new possibilities for efficiency and agility, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.

The 2025 ISG Provider Lens^® AI-Driven ADM Services report for the U.S. finds that organizations are embedding AI and automation into every layer of ADM operations to make applications more resilient and adaptable to new requirements. As they adopt this approach, they are seeking outcome-focused contracts with service providers that tie performance to measurable results such as faster release cycles, higher system availability and improved user satisfaction.

“AI is reshaping how U.S. enterprises develop, manage and modernize applications,” said Shafqat Azim, ISG partner and Americas lead, Digital Transformation. “Organizations are transforming ADM from a reactive support model into a proactive function that directly supports business growth and innovation.”

Companies in the U.S. are enhancing the performance and reliability of ADM workflows with AI-based observability, predictive analytics and automation, the report says. AI-enabled platforms automate performance tracking, business metric monitoring and incident prediction and response in real time. These capabilities significantly reduce mean time to repair (MTTR) and improve adherence to service-level agreements (SLAs). Companies in regulated sectors such as healthcare and financial services are adopting these tools to maintain compliance while improving uptime and user experience.

These trends are also redefining how U.S. organizations approach legacy systems, ISG says. Enterprises are using AI-assisted code analysis and refactoring to streamline application modernization projects, enabling faster migration to cloud-native and microservices architectures. They increasingly use GenAI for reverse engineering, test case generation and documentation, helping teams finish transformation projects faster while improving quality.

Application quality assurance (QA) is becoming a critical piece of the new approach to ADM, the report says. Enterprises are replacing static QA processes with continuous testing and AI-driven quality engineering (QE) frameworks. Automated test creation, self-healing scripts and cognitive QA ensure that applications stay consistent and reliable throughout rapid release cycles. Domain-specific QA tools are gaining momentum as enterprises in sectors such as banking, retail and healthcare test applications for compliance and customer experience.

“U.S. enterprises expect ADM services to deliver continuous innovation, resilience, and measurable value,” said Akhila Harinarayan, manager and principal analyst, ISG Provider Lens Research, and lead author of the report. “By applying AI across the ADM lifecycle, providers are helping clients achieve faster modernization, improved reliability and a sharper competitive edge.”

The report also explores other ADM trends in the U.S., including the growing role of hyperautomation and AI for operations (AIOps) in application management and the rise of intelligent DevSecOps frameworks for proactive governance and compliance.

For more insights into the ADM-related challenges faced by enterprises in the U.S., plus ISG’s advice for overcoming them, see the ISG Provider Lens® Focal Points briefing here.

The 2025 ISG Provider Lens® AI-Driven ADM Services report for the U.S. evaluates the capabilities of 53 providers across six quadrants: Application Development Outsourcing, Application Development Projects, Application Managed Services - Global SIs, Application Managed Services - Local SIs, Application Quality Assurance and Continuous Testing Specialists.

The report names Accenture, Capgemini, Coforge, Cognizant, Deloitte, HCLTech, Hexaware, IBM, Infosys, TCS and UST as Leaders in three quadrants each. It names Apexon, Hitachi Digital Services, HTC Global Services, Infinite Computer Solutions and Wipro as Leaders in two quadrants each. Atos, Birlasoft, Persistent Systems, Sutherland and Tech Mahindra are named as Leaders in one quadrant each.

In addition, DXC Technology, HTC Global Services, ITC Infotech, NTT DATA, Qualitest, TestingXperts and Unisys are recognized as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.

In the area of customer experience, LTIMindtree is named the global ISG CX Star Performer for 2025 among AI-driven ADM Services 2025 providers. LTIMindtree earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.

Customized versions of the report are available from Birlasoft and Capgemini.

The 2025 ISG Provider Lens® AI-Driven ADM Services report for the U.S. is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens^® Research

The ISG Provider Lens^® Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Mexico, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

About ISG

ISG (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,600 professionals worldwide working together to help clients maximize the value of their technology investments.

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AI is reshaping how U.S. enterprises develop, manage and modernize applications. Organizations are transforming ADM from a reactive support model into a proactive function that directly supports business growth and innovation.