Clients rated providers higher in all performance categories in an uncertain macro environment, ISG Star of Excellence™ CX Insights Report finds

Enterprise buyers’ ratings of technology and business services providers rose for a second straight year in 2023, with buyers in particular giving high marks to providers for AI services, according to a new report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2023 Annual ISG Star of Excellence™ CX Insights Report, which sums up ISG’s quarterly reviews on how enterprises rate their ITO, BPO and as-a-service outsourcing providers, shows enterprise customer experience (CX) scores increased from 2022 in all six pillars covered by ISG’s quarterly CX survey. The largest gains were in ratings for “Governance and Compliance” and “Execution and Delivery.” Enterprises gave midsized providers (those with annual revenues of $1 billion–$3 billion) the highest average CX scores of any revenue segment.

The average provider’s CX score rose from 80.1 in 2022 to 83.7 in 2023, despite an uncertain macroeconomic environment last year that saw enterprises reduce discretionary spending while working to optimize technology investments, ISG says.

“Heightened scrutiny on IT spend and tightening of outsourcing deals are driving providers to go above and beyond to deliver better CX to their customers,” said Heiko Henkes, ISG director and principal analyst in charge of the study. “Providers have stepped up their performance to meet rising expectations in the areas that enterprises consider most important.”

AI received a CX score of 78.9, the highest among emerging technologies, and is becoming a significant part of many outsourcing engagements, the report says. With both increasing enterprise use and growing regulation of AI — trends ISG expects to continue through 2024 — companies are seeking AI-related provider services in many areas, especially enterprise service management and compliance, the report says. Enterprises are willing to pay between 6 percent and 9 percent more per seat for AI features in software, according to ISG’s research.

In addition to higher CX scores for “Governance and Compliance” and “Execution and Delivery,” year-on-year improvements were observed in all other performance categories, including “Collaboration and Transparency,” “People and Culture Fit,” and “Business Continuity and Flexibility.” The average score for “Innovation and Thought Leadership” rose from 78.0 to 80.9 but remained the lowest of the six pillars.

The report also tracks CX scores for 17 technology areas, with Application Development and Maintenance (ADM) receiving the highest score last year, at 81.5, moving up three places from the prior year. ADM is becoming essential to achieving enterprise cost optimization and business objectives, especially given the rise of cloud-native and AI-based applications, ISG says. Scores for Contact Center — Customer Experience were close behind, at 80.0, with enterprises increasingly focused on improving CX.

Scores were lowest for Payroll/Benefits Administration (71.6) as firms grappled with changes in hiring trends, and for supply chain services (74.5) as organizations still struggle to improve in this area following the COVID-19 crisis.

The public sector raised CX scores more than any other industry in 2023, up 9.4 percent, as organizations recognized providers’ ability to comply with policies and regulations, proactively resolve issues and maintain strong cybersecurity, the report says. Public sector scores were highest by a wide margin, followed by manufacturing and financial services. Telecom and media industry clients slashed their average CX scores by 14.3 percent, but providers could improve these by better adapting to external changes and providing agreed-upon resources on time, ISG says.

Survey results by region show providers received lower average scores from enterprises in the Americas (77.9) than in Europe, the Middle East and Africa (82.7) or Asia Pacific (78.3). North American enterprises gave relatively high ratings, especially for governance and compliance and collaboration and transparency, but providers have room to improve in Central/South America, especially in helping clients adapt to emerging technologies, ISG says.

The report reveals details about trends in these and other areas, including the top technology vendors for CX and subcategories of what enterprises want from providers.

ISG will discuss the results of this study and preview its 2024 ISG Star of Excellence Research and Awards program during a webinar tomorrow, Thursday, February 22, at 10 a.m., U.S. Eastern time. Enterprises and providers are invited to register for the webinar by visiting this webpage.

The 4Q 2023 ISG Star of Excellence™ CX Insights Report is available as a free download from this webpage, with more detailed findings, including by provider, available by contacting ISG.

About ISG Star of Excellence™ CX Insights Research

CX scores reported in the ISG Star of Excellence™ CX Insights Report represent the weighted average of client satisfaction scores and importance scores across six dimensions: Execution and Delivery, Governance and Compliance, Collaboration and Transparency, Innovation and Thought Leadership, People and Cultural Fit, and Business Continuity and Flexibility.

Through ISG’s continuous Voice of the Customer survey research, customers are asked to rate the importance of each of the six dimensions and then rate their service provider/vendor on each, on a scale of 1-100. CX scores are also generated across industries, regions and technology domains and for each service provider/vendor.

ISG Star of Excellence™ CX Insights scores are an integral part of the provider assessments offered by ISG Provider Lens™ research, 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 who wish to participate in the ISG Voice of the Customer survey research can begin the process by visiting this website. Providers also can nominate their customers to participate.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 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 1,600 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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