Companies adopting AI, modernising systems as geopolitics, skills shortages and sustainability demands intensify challenges, ISG Provider Lens reports say.
Aerospace and defense enterprises in the US are using AI and other new technologies to enhance efficiency and CX amid rapid changes affecting the industry, according to new research reports published today by Information Services Group (ISG)
The 2025 ISG Provider Lens Aerospace and Defense Services and Solutions reports for the US 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 US aerospace and defense landscape is changing quickly and companies need to respond on multiple fronts,” said Bob Krohn, Partner and Manufacturing Industry Lad, Americas, 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 modernisation 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 US 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 optimise 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 modernising 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, customised solutions in areas including product lifecycle management, fleet optimisation, client engagement and advanced supply chain analytics.
“To benefit from new technologies, aerospace and defense companies need to invest in organisational change management and significant skills development focused on new technologies,” said Swadhin Pradhan, Assistant Director and Principal Analyst, 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 US including efforts to reach aviation decarbonisation goals and growing cybersecurity concerns around using cloud resources.
For 2025, ISG Provider Lens has published two Aerospace and Defense Services and Solutions reports for the US: 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 US 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 US 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.
