U.S. Aerospace, Defense Firms Innovate Amid Rapid Change
Companies adopting AI, modernizing systems as geopolitics, skills shortages, sustainability demands intensify challenges, ISG Provider Lens™ reports say
Aerospace and defense enterprises in the U.S. are using AI and other new technologies to enhance efficiency and client experience (CX) amid rapid changes affecting the industry, according to new research reports published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.
The 2025 ISG Provider Lens™ Aerospace and Defense Services and Solutions reports for the U.S. find that technology advancements, geopolitical disruptions and a skills shortage are forcing companies to adapt and innovate. Enterprises are investing in digital transformation, workforce development and new supply chain strategies to remain competitive in an increasingly complex business environment.
"The U.S. aerospace and defense landscape is changing quickly, and companies need to respond on multiple fronts," said Bob Krohn, partner and manufacturing industry lead, Americas, at ISG. "Actions they take now will determine their future success and resilience."
Rising geopolitical tensions are driving increased military spending in many countries, causing more capital to flow into the aerospace and defense industries, the report says. This trend is accelerating the modernization of existing systems and encouraging development of next-generation technologies. An increasingly global supply chain and growing cross-border collaboration on manufacturing and technology in recent years have accelerated this trend.
Clients of U.S. aerospace and defense manufacturers are growing more concerned about supply chain challenges, including parts shortages and labor issues, especially as demand for new aviation products increases. Enterprises are responding to these concerns by implementing innovative solutions that increase supply chain agility and optimize inventory management.
The industry is integrating AI and generative AI into some aerospace systems even as regulators emphasize the need for enhanced AI safety protocols and risk management in safety-critical functions, the report says. Technology companies are facilitating AI adoption in areas including airport operations, maintenance, repair and overhaul (MRO) and supply chain management. Cost reduction and improved CX are the central goals of these initiatives.
As they accelerate digital transformations to become more competitive, aerospace and defense companies are increasingly adopting solutions such as cloud platforms, digital twins and predictive analytics, ISG says. In many cases, they are also modernizing legacy systems, especially enterprise resource planning (ERP) platforms. Investments in workforce training are surging as enterprises prepare employees to work with emerging digital tools.
Mid-sized and specialist providers of solutions and services can be instrumental in helping companies implement new operational processes, the report says. They offer innovative, customized solutions in areas including product lifecycle management, fleet optimization, client engagement and advanced supply chain analytics.
"To benefit from new technologies, aerospace and defense companies need to invest in organizational change management and significant skills development focused on new technologies," said Swadhin Pradhan, assistant director and principal analyst at ISG, and the lead author of the reports. "Providers help them develop broad-based strategies for long-term competitiveness."
The report also explores other aerospace and defense industry trends in the U.S., including efforts to reach aviation decarbonization goals and growing cybersecurity concerns around using cloud resources.
For more insights into the challenges faced by aerospace and defense companies in the U.S., along with ISG's advice on how to address them, see the ISG Provider Lens™ Focal Points briefing here.
For 2025, ISG Provider Lens™ has published two Aerospace and Defense Services and Solutions reports for the U.S.: one examining the overall aerospace and defense services ecosystem and one focusing on mid-sized and specialist providers.
The 2025 ISG Provider Lens™ Aerospace and Defense Services and Solutions report for the U.S. evaluates the capabilities of 40 providers across four quadrants: Engineering, Design and Innovation — Overall Ecosystem, Maintenance, Repairs and Overhaul (MRO) and Aftermarket — Overall Ecosystem, Supply Chain Operations and Logistics Management — Overall Ecosystem and Technology Transformation and Consulting — Overall Ecosystem.
The report names Accenture, Capgemini, HCLTech, IBM, Infosys and TCS as Leaders in all four quadrants. It names Cognizant and Tech Mahindra as Leaders in three quadrants each and Akkodis, Cyient, Deloitte, EY, General Dynamics IT, Genpact, LTTS, PwC and Quest Global as Leaders in two quadrants each. DXC Technology and Kyndryl are named as Leaders in one quadrant each.
In addition, Cognizant, DXC Technology, Tata Elxsi and Tech Mahindra are named as Rising Stars — companies with a "promising portfolio" and "high future potential" by ISG's definition — in one quadrant each.
The 2025 ISG Provider Lens™ Aerospace and Defense Services and Solutions (Mid-Sized and Specialists) report for the U.S. evaluates the capabilities of 17 providers across three quadrants: Aerospace and Defense Services — Mid-Sized and Specialists, Engineering, Design and Innovation — Mid-Sized and Specialists and Technology Transformation and Consulting Mid-Sized and Specialists.
The report names Cyient, LTTS and Quest Global as Leaders in all three quadrants. It names Engineering Industries eXcellence and Tata Elxsi as Leaders in two quadrants each. AXISCADES, FPT Software, Hitachi Digital Services and Microland are named as Leaders in one quadrant each.
In addition, eInfochips, FORCAM and Hitachi Digital Services are named as Rising Stars — companies with a "promising portfolio" and "high future potential" by ISG's definition — in one quadrant each.
A customized version of the report is available from Microland.
The 2025 ISG Provider Lens™ Aerospace and Defense Services and Solutions reports for the U.S. are available to subscribers or for one-time purchase on this webpage for the overall ecosystem report and this webpage for the midsize and specialist report.
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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Laura Hupprich, ISG
+1 203 517 3132
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Julianna Sheridan, Matter Communications for ISG
+1 978 518 4520
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