Item 1. Business
Item 1. Business
Unless the context otherwise requires, Information Services Group, Inc., the registrant, is referred to in this Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Form 10-K”) as the “Company,” “ISG”, “we,” “us” and “our.”
Our Company
Information Services Group, Inc. (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 sourcing that is now focused on 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 more than 1,300 professionals worldwide working together to help clients maximize the value of their technology investments. For more information, visit www.isg-one.com. The content on our website is available for informational purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report on Form 10-K or any other filings.
Our Company was founded with the strategic vision to become a high-growth, leading provider of information-based advisory services. We continue to believe that our vision will be realized through the acquisition, integration and successful operation of market-leading brands within the data, analytics and advisory industry.
Our private and public sector clients continue to face significant technological, business and economic challenges that we believe will fuel demand for the professional services we provide. We are focused on providing unique solutions that solve key client problems. In the private sector, for example, we believe that companies will continue to face significant challenges associated with globalization and technological innovation, including the need to decrease operating costs, increase efficiencies, compete against new market entrants and evaluate and adopt increasing numbers of emerging and transformational technologies, such as Artificial Intelligence. Similarly, public sector organizations at the national, regional and local levels increasingly must deal with the complex and converging issues of outdated technology systems, reduced budgets and an aging workforce.
Overall, we believe the global marketplace dynamics at work in both the private and public sectors support growing demand for the professional services, analytics, platforms and advice ISG can provide. In this dynamic environment, the strength of our client relationships greatly depends on the quality of our advice and insight, our unique and valuable datasets, the independence of our thought leadership and the effectiveness of our people in assisting our clients to implement strategies that successfully address their most pressing operational challenges.
We are organized as a corporation under the laws of the State of Delaware. The current mailing address of the Company’s principal executive office is Information Services Group, Inc., 2187 Atlantic Street, Stamford, CT 06902. Our telephone number is (203) 517-3100.
Our Services
ISG specializes in digital transformation services, including sourcing advisory, cloud and data analytics; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. ISG supports both private and public sector organizations to transform and optimize their operational environments. During periods of expansion or contraction, our services have helped organizations of all sizes across the globe address their most complex operational issues. The functional domain experience of our experts and deep empirical data resources allows clients to better understand their strategic options.
The Company’s operating model is aimed at extending our market leadership, enhancing growth opportunities and driving significant value for all stakeholders. We provide services that address our clients’ most pressing business challenges in two areas we believe are most important to them—their continuing digital transformation and getting the most from their digital investments. To meet these needs, we formed two global client solution areas: ISG Digital, focused on developing technology, transformation, sourcing and digital solutions for clients, and ISG Enterprise, focused on helping clients manage change and optimize operations in such areas as finance, human resources (“HR”) and training.
Our core solutions are supported by ISG Research, with its extensive market analyses and provider evaluations, our ISG Network and Software Advisory services and our software platforms, including ISG GovernX® and ISG Tango. We also continue to build more industry-specific capabilities in such areas as banking, insurance and smart manufacturing.
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Every client engagement passes through our dedicated Solution Hub to bring the best thinking, tools and capabilities to bear to solve client challenges. Integrated solutions are then delivered through our ISG iFlex™ global delivery model, which enables us to rapidly deploy our resources to support clients, regardless of geography or time zone.
Our Competitive Advantages
We believe that the following strengths differentiate us from our competition:
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Independence and Objectivity . We are not an information technology or business process outsourcing service provider. Rather, we are an independent, fact-based data, analytics and advisory firm with no material conflicting financial or other interests. This enables us to maintain a trusted advisor relationship with our clients through our unbiased focus and ability to align our interests with those of our clients.
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Proprietary Data Assets and Market Intelligence. We have assembled a comprehensive and unique set of data, analytics and market intelligence built over more than 30 years of data collection and analysis, providing insight into the comparative cost and quality of a variety of operational alternatives.
● Domain Expertise. Averaging over 20 years of experience, our strategic consulting teams bring a wealth of industry and domain-specific knowledge and expertise to address our clients’ most complex transformational needs.
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Strong Brand Recognition. ISG continues to gain marketplace awareness as a leading brand in our industry. ISG offers integrated solutions to our clients.
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Global Reach. We possess practical experience in global business operations, and we understand the significance of interconnected economies and companies. Our resources in the Americas, Europe and Asia Pacific make us a truly global advisory firm able to consistently serve the strategic and implementation needs of our clients.
We believe the above strengths are central to our ability to successfully advise and support our clients to address any business challenge.
Our Strategy
We intend to use our competitive strengths to develop new services and products, sustain our growth and strengthen our existing market position by pursuing the following strategies:
● Preserve and Expand Our Market Share Positions. We expect the trend toward operational efficiency led by the accelerating adoption of AI-based technologies to play an increasing role in the demand for our services. We plan to leverage our proprietary operating platform (Tango) to serve the growing number of private and public sector organizations utilizing outside advisors when undertaking cost optimization and transformation programs. We are focused on growing our existing client base by offering integrated solutions that combine our multiple services and capabilities. In addition, we will seek to continue to expand our products and services, and the geographic markets we serve opportunistically as global competition spurs demand for cost savings and value creation.
● Preserve Our Financial Positions. In our pursuit of the Company’s growth initiatives, we are committed to maintaining a strong financial position with flexibility and liquidity. The priorities for uses of available cash include funding growth, payment of dividends, share repurchases and debt reduction. We expect our cash flow generation and solid balance sheet to support the firm’s current operating strategy .
● Strengthen Our Industry Expertise. We plan to continue to invest in and strengthen our market-facing organization to drive increased revenue targeting nine global industries: Banking and Financial Services, Consumer Services, Energy and Utilities, Health Sciences, Insurance, Manufacturing, Media and Technology Software and Services, Private Equity and Public Sector.
● Expand Our Offering Focus. We seek to drive our service portfolio and relationships with clients further into AI-centered Technology Advisory Services, including Business Advisory Services, AI-Centered Technology Strategy, Data & Analytics, IT Transition Services, Organizational Change Management (OCM) and Network & Software Advisory. These are all areas in which we are investing in an attempt to drive increased revenue and expand client relationships.
ISG plans to expand resources and intellectual property around AI-centered technologies. Our purpose in the marketplace is to be a trusted advisor, guiding our clients through their AI and technology transformations toward practical innovation of their business models, leveraging strategic partners, emerging technology and thought leadership.
Our digital services now span a volume of offerings and have become embedded as part of our traditional transaction services. We are now leveraging the advancements of AI into our digital services. For example, we continue to modernize our traditional sourcing services
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to leverage AI, data and analytics to bring agility and nimbleness to the process of sourcing, RFPs and contracting. Our ISG Tango sourcing platform is a unique, AI embedded, comprehensive solution that enables enterprises and public sector organizations to quickly evaluate their business requirements, identify desired outcomes, fast-track the provider identification and selection process, collaborate with providers on developing the right solution, get to a signed contract and transition operations faster than before.
ISG continues to expand our Supplier and Contract Management capabilities powered by our GovernX® platform, a market leading vendor compliance and risk management digital solution. This offering provides clients a strategic and disciplined approach to supplier relationship and large contract management. Our suite of offerings includes supplier performance improvement, reducing spend, third-party risk mitigation, and supplier-based management. Based on ISG’s 25 years of managing relationships on behalf of our clients, we have a unique and robust dataset that enables ISG to partner with clients to deliver improvements to their business processes and to benchmark the performance of their operations to the broader market. ISG GovernX leverages AI to automate the management of third-party supplier relationships, including contract and project lifecycles and risk management. Enterprises leverage the platform to deliver more value from their outsourcing spend.
ISG GovernX users can easily manage new contracts and proactive renewals, make timely amendments and handle contract terminations—all on one platform. The platform allows for integration with other enterprise applications, such as ServiceNow, and is tightly connected to ISG Research offerings, such as contract benchmarks, assessments and total-cost-of-ownership evaluations. Additionally, ISG GovernX clients can mitigate supply chain risks and ensure business continuity by reviewing and validating their providers’ business and IT continuity plans and procedures. ISG GovernX includes real-time third-party risk management capabilities, including integrated data feeds and real-time alerts, which are increasingly important as provider ecosystems grow more complex, introducing more risk to the enterprise, and threats against supply-chain integrity become more diverse. In addition to monitoring the operational performance and financial viability of their suppliers, ISG GovernX helps enterprises address a range of other internal and external risks, from data security and regulatory issues, to adverse environmental, health and geopolitical events, to social responsibility, diversity and inclusion considerations.
We continue to invest in ISG Inform™ 2.0, an enhanced version of our data-as-a-service solution that provides benchmarking capability to track digital transformation and application development maturity and performance against industry peers. ISG Inform 2.0 provides a quantified view of the health of the user’s enterprise IT landscape through a series of easy-to-read visual dashboards that display key performance indicators for infrastructure, applications and digital capabilities compared with industry peers. Data and insights are drawn from the ISG total cost of ownership and sourcing databases.
AI is fundamentally reshaping the way businesses work. It will allow companies to automate “high touch” functions and processes historically requiring human focus. ISG offers clients AI assessments and strategy.
● Expand Emerging Services . The focus will be on creating repeatable methods used to drive growth of emerging services, including AI, ISG Training-as-a-Service, ISG Network Select™, HR Technology & Transformations and ISG Research.
1. ISG AI: ISG is focused on influencing how our clients adopt Artificial Intelligence. As companies transform into AI-powered enterprises, ISG provides crucial buying advice, access to diverse AI technologies and niche implementors via a marketplace, and impartial governance solutions. By offering a comprehensive understanding of various AI providers and platforms, ISG helps companies make informed decisions that align with their specific needs. This strategic advice is essential in an ever-evolving AI landscape. ISG also assists clients in adapting to these changes by helping them reassess the value of their traditional IT operations and contracts with partners — in the context of AI-enhanced productivity. We believe that this reassessment or ‘marking to market’ is crucial for companies to realize the full benefits of AI integration.
2. Training-as-a-Service (TaaS): ISG offers training-as-a-service (TaaS) and outsourced managed learning services for organizations with limited resources and growing demand for custom learning content and digital learning platforms. These organizations are typically looking for longer-term training support to address the needs of an evolving workforce. ISG TaaS uses an agile approach with rapid content development tools to accelerate training content and digital adoption platforms (DAP) to integrate learning into the daily flow of work. Services include training advisory, analysis, strategy, custom development, delivery support, learning software subscription models, learning administration and learning assessment.
3. ISG Network Select: This offering helps streamline and simplify how enterprises build their network solutions. It enables ISG to address the growing demand for such leading-edge networking solutions as software-defined networking (SD-WAN, SD-LAN), SD security services, 5G mobility, unified communications-as-a-service (UCaaS) and call center-as-a-
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service (CCaaS) — which are all critical to enterprise transformation. Client demand for networks that are secure, interconnected, interoperable and profitable is rising, as are concerns over security, scale, cost and the complexity of the expanding Internet of Things landscape. ISG Network Select is designed to help clients find the best solutions, faster, to power their digital transformation initiatives. Clients get access to detailed and current data on their vendor and technology options and insights to help negotiate better pricing.
4. HR Technology & Transformations: Advances in AI-centric technologies are transforming the business of HR. From intuitive and mobile self-service software to predictive analytics and integrated talent management suites, technological solutions are changing the way leaders acquire, develop and engage their employees. New applications, enhanced functionality and competition among software providers make it difficult to stay on top of this ever-evolving space. ISG combines deep subject matter expertise, market data and financial frameworks, along with sourcing of technology and service providers, to help organizations develop and execute HR technology strategies that are right for them.
5. ISG Research: In today’s digital marketplace, ISG helps large enterprises confront emerging challenges, prepare for new opportunities and ensure they stay ahead of competitors. With a powerful mix of advisory, digital transformation and research capabilities, ISG helps close the gap between where enterprises are and where they need to be. ISG Research has a focus on bringing buyers and sellers of technology together, including large service, cloud and software providers. Our advisory business gives ISG Research a unique perspective on the overall technology and sourcing market. Our research not only incorporates what a traditional analyst firm might cover, but also actual feedback and perspectives from practitioners in the market who are helping some of the largest enterprise clients transform their business. ISG tracks over 180,000 unique technology service contracts and measures and writes about more than 4,000 service and software providers each year. This gives us valuable insights into pricing, capabilities and stability. When large enterprises need to evaluate providers, they reach out to ISG Research for a deep understanding of capabilities, pricing, breadth of coverage and past experience. With the rapid pace of technological evolution including AI, we believe that ISG Research is ready and well-positioned with enterprises to ensure our clients avoid the hype and capitalize on outcomes. In addition to serving enterprises, ISG research also helps providers navigate the marketplace through market intelligence, client retention programs, pursuit assessments and client satisfaction benchmarking.
● Expand “Recurring Revenue Streams.” These include such annuity-based ISG offerings as ISG GovernX, ISG Research Lens, ISG Inform and multi-year Public Sector contracts. All are characterized by subscriptions (i.e., renewal-centric as opposed to project-centric revenue streams) or multi-year contracts. As companies begin to recognize the importance of managing the post-sourcing transaction period, managed services have emerged as a revenue driver for the Company, with our offerings delivered through multi-year managed services contracts. We believe that our experience with outsourcing transactions and software implementation initiatives makes us uniquely equipped to provide research insight and direct support to help our clients manage their transformational projects or act as a third-party administrator. We will continue to pursue opportunities to leverage our experience to make research and managed services an even greater revenue generator for us. The U.S. public sector, particularly state governments, local municipalities and higher education, presents a significant opportunity to ISG. Systems are typically outdated, maintenance is expensive and the workforce charged with maintenance is aging. There is a need to refurbish systems to reduce the cost of operations (particularly because governments’ tax revenues are under pressure). We believe we are well-positioned as a third party, objective advisor with no affiliation to the software providers. ISG will continue to invest in the evolution of these services, with an aim to drive increased AI adoption, greater profitability and even more value for our clients.
● Consider Acquisitions and Other Growth Opportunities. The business services, information and advisory market is highly fragmented. We believe we are well-positioned to leverage our leading market positions and strong brand recognition to expand through acquisitions and other growth opportunities. Acquiring firms with complementary services and products would allow us to further develop and broaden our service offerings and domain expertise. We will consider and may pursue opportunities to enter joint ventures and to buy or combine with other businesses.
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Our Proprietary Data Assets and Market Intelligence
One of our core assets is the information, data, analytics, methodologies and other intellectual property we possess. This intellectual property underpins the independent nature of our operational assessments, strategy development, deal structuring, negotiation and other consulting services we provide to our clients.
With each engagement we conduct, we enhance both the quantity and quality of the intellectual property we employ on behalf of our clients, thus providing a continuous, evolving and unique source of information, data and analytics.
This intellectual property is proprietary, and we rely on multiple legal and contractual provisions and devices to protect our intellectual property rights. We recognize the value of our intellectual property and vigorously defend it. As a result, we maintain strict policies and procedures regarding ownership, use and protection of our intellectual property with all parties, including our employees.
Clients
We operate in over 20 countries and across numerous industries. Our private sector clients operate primarily in the manufacturing, banking and financial services, insurance, health sciences, energy and utilities and consumer services industries. Our private sector clients are primarily large businesses ranked in the Forbes Global 2000 companies annually. Our public sector clients are primarily state and local governments (cities and counties) and authorities (airport and transit) in the United States and national and provincial government units in the United Kingdom, Italy and Australia.
Competition
Competition in the sourcing, data, information and advisory market is primarily driven by independence and objectivity, expertise, possession of relevant benchmarking data, breadth of service capabilities, reputation and price. We compete with other sourcing advisors, research firms, strategy consultants and sourcing service providers. A significant number of independent sourcing and advisory firms offer similar services to us. We believe we set ourselves apart with our data repository of recent, comparable transactions and benchmarking data, our depth of experience and our sourcing and technology implementation expertise, all of which are critical to implementing and managing successful transformation projects for business and governments.
Employees
As of December 31, 2024, we employed 1,323 people worldwide, of which 1,289 are full-time employees.
Our employee base includes executive management, service leads, partners, directors, advisors, analysts, technical specialists and functional support staff.
We recruit advisors from service providers and consulting firms with direct operational experience. These advisors leverage extensive practical expertise derived from experiences in corporate leadership, consulting, research, financial analysis, contract negotiations and operational service delivery.
All employees are required to execute confidentiality, conflict of interest and intellectual property agreements as a condition of employment. There are no collective bargaining agreements covering any of our employees.
Our voluntary advisor turnover rate has ranged between 12% and 15% over the last three years.
Human Capital Management
ISG strives to employ the brightest, most innovative people in the industry, so that we can provide world-class solutions to our clients. Employees at ISG are anchored in our core values, which include trust, integrity, respect, diversity, passion, entrepreneurship, balance and mentorship.
Our more than 1,300 employees, located in over 20 countries with more than one-fourth in the United States, perform a variety of different roles. We are participants in the competitive research and advisory industries. Attracting, developing and retaining talented people in advisory, research and other positions is critical to executing on our strategy. Our ability to compete effectively depends upon a number of factors, including learning opportunities, compensation/benefits, work environment, career opportunities and a culture of inclusivity. To make this happen, we have certain programs, training, policies and practices in place, including the following:
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Diversity/Inclusion
ISG believes a key to our success is our value of diverse backgrounds, experiences and cultures. Our employees function within a collaborative community that welcomes varied ideas and styles. We believe that these diverse perspectives produce enhanced results for our clients and result in a preferred place to work.
We exhibit our commitment to diversity and inclusion through our hiring practices, opportunities for learning and advancement and the distribution of rewards. Through efforts such as our Inclusion, Diversity, Equity and Awareness (IDEA) team and Women-In-Digital industry group, we are able to help in the identification and advancement of diverse talent. We strive to provide a culture where each employee is able to bring their whole self to work. While we have made progress in our workforce diversity representation, we seek to continually improve in this area.
ISG WorkLife
We have also introduced ISG WorkLife, which is a series of progressive, best practice, Next-Gen HR offerings designed to improve the quality of our employees’ work-life experience, while helping us achieve our firm-wide objectives. ISG believes this will help us attract and retain productive talent. Some of the key offerings here include:
● ISG Cares , our enhanced volunteering program, which, among other things, provides employees paid time off to attend to charitable pursuits.
● ISG Academy , our global learning and development program.
● ISG Aspire , our global mentoring program.
● ISG iRefer , which allows the Company to attract talent through employee referrals, for which employees may earn referral bonuses.
● ISG iTime , which provides flexible paid time off arrangements for employees in certain countries.
● ISG Brand Ambassador , which highlights and encourages our people’s community support and charitable pursuits while elevating the firm’s global brand.
We understand that employees have varied interests both in and outside of the workplace. These programs, and others under ISG WorkLife, provide employees with the opportunity to pursue these activities. This allows us to attract and retain productive employees and enhance diverse perspectives.
Environmental Social and Governance (ESG)
The ISG Environmental Social and Governance program was developed with corporate commitment and accountability on a global level in mind. The program has oversight and executive support to drive real, positive change in alignment with our value and policies, ultimately enabling us to maximize impact and value.
Our ISG Go Green program speaks to the Environmental pillar of ESG. This program seeks to reduce our carbon footprint via awareness and education initiatives that share green practices for ISG employees in both virtual and physical offices. Additionally, ISG is developing measurable carbon reduction best practices that align with our goals for sustainable business operations. Since 2021, we have offset the carbon generated by ISG employee travel and continue to seek ways to pivot to green energy for our physical locations. Our environmental work is centered around three core concepts: compliance with eco-friendly laws and best practices, prevention of waste, pollution and carbon emissions and continuous, measurable improvement.
The IDEA (Inclusion, Diversity, Equity and Awareness) program is the foundation for our social pillar. Beyond our core Diversity, Equity and Inclusion (DEI) activities, ISG has sub-groups that devote focus to uplifting women in digital, maintaining equitable recruitment, building our supplier diversity and volunteering through our global ISG Cares team. At ISG, we do not just accept difference — we celebrate it, and we thrive on it for the benefit of our employees, our clients and our communities. We commit to building a team that represents a variety of backgrounds, perspectives and skills. ISG is proud to be an equal opportunity workplace, and we are committed to creating an inclusive environment for all employees. Our work in the social pillar is based on ISG values of trust, integrity, respect and diversity, made tangible in our business practices, modern slavery statement and fair labor policies.
For the Governance pillar, ISG has a well-established set of policies, governing bodies and independent validation measures. ISG is governed on a day-to-day basis by our internal international executive board, which meets weekly. ISG also receives governance and support from an external board of directors (the “Board of Directors”). We maintain procedures, policies and codes of conduct around ethical business practices, whistleblowing, suppliers, data protection, information security, privacy, confidentiality, employee comportment and travel. With regard to cybersecurity, we regularly provide training, reporting and scans in compliance with our ISO-27001 certifications and
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best practices. Every year, our employees attest to reviewing our global policies via digital signature, including in 2023 a new policy regarding the acceptable use of generative automated intelligence.
Learning
ISG’s success depends on the knowledge and productivity of our employees. To that end, the Company invests a significant amount of time and money into providing development opportunities. Our ISG Academy is robust in offering learning in such topics specific to the employee’s industry and functional areas, leadership and people management, certifications and software and technical skills, among others. In 2024, most learning was virtual; there were over 1,300 digital certified professionals that participated in various sessions, which average 12 hours of training per professional that has been devoted to learning and development.
Available Information
Our Internet address is www.isg-one.com . The content on our website is available for informational purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this Annual Report on Form 10-K or any other filings. We make available through our Internet website under the link titled “Investors” our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments or exhibits thereto, as soon as reasonably practicable after we electronically file any such materials with the Securities and Exchange Commission (the “SEC”). Copies of our key corporate governance documents, including our Code of Ethics and Business Conduct for Directors, Officers and Employees, Corporate Governance Guidelines and charters for our Audit Committee, our Nominating and Corporate Governance Committee and our Compensation Committee, are also on our website. Stockholders may request free copies of these documents, including our Annual Report to Stockholders, by writing to Information Services Group, Inc., 2187 Atlantic Street, Stamford, CT 06902, Attention: Michael A. Sherrick, or by calling (203) 517-3100.
Our annual and quarterly reports and other information statements are also available to the public through the SEC’s website at www.sec.gov .