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U.S. Public Sector, Facing Major Changes, Shifts to the Cloud

Government agencies are breaking out of aging IT infrastructure and methods with managed hosting and managed services, ISG Provider Lens™ report says

Public sector organizations in the U.S. are responding to major changes in work and technology by shifting IT operations to private or hybrid clouds, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2022 ISG Provider Lens™ Next-Gen Private/Hybrid Cloud — Data Center Services and Solutions report for the U.S. Public Sector finds the rise of remote work during the COVID-19 pandemic is only one of several trends affecting the IT operations of government agencies. Increased cybersecurity threats, a growing need for edge computing, staff shortages and server systems reaching their end of life are also changing public sector IT needs. For many agencies, the answer is to shift more IT functions to cloud service providers.

“Public sector agencies have maintained legacy IT estates well beyond their end of life. This is an unsustainable strategy that is no longer keeping pace with stakeholder demands,” said Nathan Frey, partner, ISG Public Sector. “Private and hybrid clouds offer a way to modernize IT within the government’s budget and staffing limits.”

The public sector is grappling with the same trends other industries face, along with its own specific challenges, the report says. The pandemic forced agencies to connect with employees and constituents online and triggered the “great resignation,” which has included many retiring public-sector IT employees. Some emerging public-sector applications, such as environmental monitoring and roadside systems that communicate wirelessly with vehicles, require the knowledge and expertise to roll out new edge computing technologies.

More than in the private sector, many public sector organizations in the U.S. still use aging mainframes based on computer languages that few working programmers know, the report says. With mainframe experts retiring, agencies have few choices other than outsourcing their work to service providers or migrating mainframe applications to new, cloud-native platforms.

The U.S. public sector is at a disadvantage when hiring staff for new technologies, because private companies are better able to pay the premium for talent in today’s tight labor market, ISG says.

“Service providers are often better able to support special IT needs because they can hire one expert to serve multiple clients,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research.

The 2022 ISG Provider Lens™ Next-Gen Private/Hybrid Cloud — Data Center Services and Solutions report for the U.S. Public Sector evaluates the capabilities of 24 providers across two quadrants: Managed Services and Managed Hosting.

The report names Rackspace Technology and Unisys as Leaders in both quadrants. It names Accenture, Ensono, Infosys, Lumen, NTT Ltd., TCS and Wipro as Leaders in one quadrant each.

In addition, Lumen is named a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in Managed Services.

A customized version of the report is available Unisys.

The 2022 ISG Provider Lens™ Next-Gen Private/Hybrid Cloud — Data Center Services and Solutions report for the U.S. Public Sector is available to subscribers or for one-time purchase on this webpage.

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, 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.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 800 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 1,300 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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