U.S. Manufacturers Embracing Digital Transformation to Meet Changing Demands, Challenges

ISG Provider Lens™ report says digital engineering is helping firms develop and manufacture next-generation chips, smart industrial equipment and software-defined vehicles

Service providers are aiding the transformation of manufacturing in several industries in the U.S., allowing firms to increase automation, efficiency and resiliency, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2021 ISG Provider Lens™ Manufacturing Industry Services report for the U.S. finds ongoing changes in the U.S. transportation, technology and industrial equipment sectors, among others, are driving digital engineering advancements with broad implications for U.S. firms.

“U.S. manufacturers, including automotive, chip and industrial equipment makers, are quickly maturing into a digital future,” said David Lewis, partner, ISG Manufacturing, in the Americas. “Service providers play critical roles in making this evolution possible.”

The U.S. automotive industry is undergoing historic change in multiple dimensions and transforming its operations to meet new requirements, the report says. To make strides in vehicle electrification, connectivity, autonomy and security, OEMs are shifting their focus from traditional hardware-driven design and development to software-defined vehicles.

This requires new kinds of vehicle architectures, replicating the cloud computing model in centralized onboard computing platforms that perform many of the tasks previously carried out by electronic control units distributed around the vehicle, ISG says. Functions such as telematics, engine control and advanced driver-assistance systems (ADAS) are centralized, increasing software flexibility and vehicle efficiency.

The off-highway industrial vehicle and equipment sector, which is less digitally mature than the automotive industry, is turning to service providers as partners in building digital foundations for the future, the report says. This market encompasses fleet operations, rentals and leased equipment for agriculture, mining and construction.

Service providers are helping manufacturers in the agricultural, construction and heavy vehicle industries implement automation and shop floor integration to optimize their output, according to ISG. Enterprises are now considering plans for full-scale automation of assembly lines and supply chains, including warehouse and lineside supply.

The consolidation of hi-tech manufacturing companies in the U.S. has benefited outsourcing and offshoring companies, as major service providers already work with most of the largest semiconductor vendors, the report says. The long-term outsourcing partners of these companies become preferred R&D providers. Meanwhile, as companies such as Facebook, Apple, Google and Microsoft begin to design their own chips, they are seeking providers of turnkey services.

Over time, ISG predicts chip manufacturers will offer more software-enabled products and services. These platform-as-a-service offerings will generate recurring revenue for the companies, which today are largely locked into one-time sales of semiconductors.

The 2021 ISG Provider Lens™ Manufacturing Industry Services report for the U.S. evaluates the capabilities of 38 providers across three quadrants: Digital Engineering – Transportation, Digital Engineering – Hi-Tech, and Digital Engineering – Industrial.

The report names Capgemini, HCL, LTTS and Wipro as Leaders in all three quadrants. It names Infosys, TCS and Tech Mahindra as Leaders in two quadrants each and Cognizant, Cyient, DXC Technology, eInfochips and UST as Leaders in one quadrant each.

In addition, Caresoft (Global) is named as a Rising Star—a company with a “promising portfolio” and “high future potential” by ISG’s definition—in two quadrants. Ignitarium is named as a Rising Star in one quadrant.

A customized version of the report is available from LTTS.

The 2021 ISG Provider Lens™ Manufacturing Industry 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, 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.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 800 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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