Information Services Group (NASDAQ: III) reported that technology demand expanded sharply in the second quarter, driven primarily by cloud-based software and infrastructure services tied to artificial intelligence. On its 95th consecutive ISG Index call, the firm said the combined market for managed services and “as-a-service” offerings reached $42.3 billion in annual contract value (ACV) in the second quarter, up 43% from a year earlier, marking the first time the combined market crossed $40 billion in a quarter. For the first half of the year, combined market ACV reached $81.3 billion, up 35% year-over-year. As-a-service ACV reached $31.5 billion in the quarter, with first-half as-a-service ACV rising 53%. Managed services ACV totaled $10.9 billion in the quarter, up 2.7% year-over-year. Steve Hall, ISG’s Chief AI Officer, said enterprise demand is expanding, but a meaningful share of current growth is tied to model providers purchasing large amounts of compute capacity. New scope activity within managed services reached an all-time high of $8.2 billion, up 14% year-over-year, representing more than 75% of managed services bookings. Within IT outsourcing, first-half ACV declined 6%, the first first-half decline since 2022.