U.S. Firms Partner with Providers to Leverage AI in Application Development and Modernization, ISG Report Reveals

U.S. enterprises are transforming application development and maintenance (ADM) by forming deeper partnerships with service providers, leveraging AI to drive innovation, agility, and competitiveness, according to the 2025 ISG Provider Lens® AI-Driven ADM Services report. The research by Information Services Group (ISG), a global technology advisory firm, highlights how AI is shifting ADM from a reactive support function to a proactive engine of business growth. Organizations are integrating AI and automation across all layers of ADM to enhance application resilience, adaptability, and performance. This includes using AI-powered observability, predictive analytics, and real-time incident detection and response. These capabilities significantly reduce mean time to repair and improve service-level agreement compliance, especially in regulated industries like healthcare and finance. AI is also accelerating legacy system modernization. Enterprises are using AI-assisted code analysis and refactoring to streamline migration to cloud-native and microservices architectures. Generative AI tools are being applied for reverse engineering, automated test generation, and documentation, helping teams complete modernization projects faster and with higher quality. Quality assurance is evolving from static testing to continuous, AI-driven quality engineering. Automated test creation, self-healing scripts, and cognitive QA ensure reliability during rapid release cycles. Sector-specific QA tools are gaining traction, enabling banks, retailers, and healthcare providers to validate applications for both compliance and user experience. The report emphasizes that U.S. companies now expect ADM services to deliver measurable outcomes—such as faster deployment, higher availability, and improved user satisfaction—leading to a rise in outcome-based contracts with providers. Beyond modernization, trends like hyperautomation, AI for operations (AIOps), and intelligent DevSecOps are reshaping how applications are managed and secured. These frameworks enable proactive governance, faster issue resolution, and stronger compliance. In its evaluation, ISG named Accenture, Capgemini, Coforge, Cognizant, Deloitte, HCLTech, Hexaware, IBM, Infosys, TCS, and UST as Leaders in three quadrants each. Apexon, Hitachi Digital Services, HTC Global Services, Infinite Computer Solutions, and Wipro were recognized as Leaders in two quadrants. Atos, Birlasoft, Persistent Systems, Sutherland, and Tech Mahindra were Leaders in one quadrant. DXC Technology, HTC Global Services, ITC Infotech, NTT DATA, Qualitest, TestingXperts, and Unisys were named Rising Stars—companies with strong potential and promising portfolios. LTIMindtree earned the title of global ISG CX Star Performer for 2025 in the AI-Driven ADM Services category, based on the highest customer satisfaction scores in ISG’s Voice of the Customer survey. Customized versions of the report are available from Birlasoft and Capgemini. The full report is accessible to subscribers or for one-time purchase. ISG Provider Lens® research combines data-driven analysis with expert insights from ISG’s global advisory team, covering providers in the U.S., Europe, Canada, Latin America, the U.K., Australia, and Southeast Asia. The firm, founded in 2006, serves over 900 clients, including 75 of the world’s top 100 enterprises, and employs 1,600 professionals worldwide.