Manufacturers worldwide are rapidly embedding advanced digital systems into their design, production, and service operations to overcome growing business and technology challenges, according to a newly released research report from Information Services Group (ISG), a global AI-focused technology research and advisory firm.
To begin with, the 2025 global ISG Provider Lens Manufacturing Industry Services and Solutions Mid-Tier and Specialist IT Firms report highlights how enterprises are shifting away from isolated digital projects. Instead, they are adopting coordinated modernization programs that upgrade legacy systems while delivering measurable improvements in efficiency and performance.
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Manufacturers today face increasing pressure from multiple fronts. For example, supply chain disruptions, strict regulatory requirements, and ongoing workforce shortages are forcing companies to rethink how they operate. As a result, many are investing in digital operating models that enable faster decision-making, stronger asset utilization, and tighter integration between IT and operational technology (OT).
“Manufacturers are moving decisively toward digital operating models that balance innovation with control,” said Bob Krohn, partner at ISG. “Mid-tier and specialist IT providers have the agility and domain expertise to support these efforts with modular solutions that can be integrated with legacy systems.”
Furthermore, AI adoption is no longer limited to experimentation. The report explains that AI-powered analytics, predictive maintenance, and digital twin technologies are becoming deeply embedded in core manufacturing workflows. These tools help reduce downtime, improve forecasting accuracy, and allow manufacturers to respond more quickly to changes in customer demand while keeping costs under control.
At the same time, smart factory modernization continues to gain momentum. Enterprises are increasingly integrating IoT systems, robotics, and real-time monitoring into production environments. Consequently, manufacturers are replacing fragmented legacy infrastructure with interoperable platforms that connect design, manufacturing, and business operations. This not only strengthens quality control but also shortens production cycles, providing greater agility in volatile market conditions.
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In addition, sustainability has become a central priority, particularly in Europe. Manufacturers are adopting digital platforms for carbon tracking, energy optimization, and circular economy initiatives. These capabilities help companies meet compliance standards while also improving long-term profitability and risk management.
“Digital technologies, customer expectations and sustainability demands are forcing manufacturers around the world to quickly adapt,” said Swadhin Pradhan, principal analyst, ISG Provider Lens Research, and lead author of the report. “Agile providers are tailoring technology, transformation and consulting services to the needs of enterprises in different regions and industries.”
The report also notes other key trends shaping the sector, including supply chain regionalization, workforce augmentation through automation, and the growing importance of cybersecurity as IT and OT environments converge.
Notably, ISG evaluated 41 providers across four major service quadrants. MHP emerged as a Leader in all categories, while several other firms were recognized as Leaders or Rising Stars for their strong portfolios and future potential.
Overall, the report confirms that digital transformation is no longer optional for manufacturers it is now essential for resilience, competitiveness, and sustainable growth in the years ahead.
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