U.S. Firms Transform Digital Engineering with AI

Key Terms

digital twin technical

A digital twin is a live virtual replica of a physical asset, process, or system that mirrors real-world behavior using data and models so users can test changes, predict problems, and measure performance without touching the real thing. For investors, digital twins matter because they can lower maintenance costs, speed product development, improve uptime and reliability, and make future cash flows and risks easier to forecast — like using a flight simulator to safely train and tune a real airplane.

agentic AI technical

Agentic AI refers to computer systems that can make their own decisions and take actions without needing someone to tell them what to do each time. It's like giving a robot a degree of independence to solve problems or achieve goals on its own, which matters because it could change how we work and interact with technology in everyday life.

hybrid architectures technical

Hybrid architectures are systems that combine two or more different technology approaches—such as cloud-based services and local servers, or traditional software and newer machine-learning components—so they operate together as one solution. Like a hybrid car using gas and electric power to balance efficiency and performance, these designs matter to investors because they can lower costs, reduce operational risk, meet regulatory or data-location needs, and speed up product delivery, all of which affect profitability and growth potential.

Enterprise-wide digital threads and agentic AI systems enable self-optimizing operations and measurable outcomes, ISG Provider Lens^® report says

STAMFORD, Conn.--(BUSINESS WIRE)-- Enterprises in the U.S. are integrating AI into digital engineering at scale, building self-optimizing autonomous ecosystems that encompass all physical assets and digital platforms, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.

The 2026 ISG Provider Lens^® Digital Engineering Services (DES) Midsize Providers report for the U.S. finds that organizations are replacing fragmented technology deployments with cohesive architectures that connect R&D, operations and customer functions, enabling real-time visibility and measurable performance improvements across the value chain. Midsize service providers play a critical role in this shift, contributing domain expertise and agility to help enterprises implement tailored solutions without the complexity of large-scale delivery models.

“Leading organizations in the U.S. are creating AI-based digital threads that link digital twins, processes and products, eliminating fragmentation and technical debt,” said Matteo Gallina, Americas lead, Digital Engineering Solutions, ISG. “This enables a profound shift toward systems that continuously translate data into action, identifying and correcting performance gaps even as requirements change.”

At the heart of this transition are agentic AI systems that automate complex workflows across multiple functions. These systems plan, execute and adjust processes in real time, reducing inefficiencies caused by disconnected data and manual intervention. They allow organizations to take full advantage of enterprise-wide data streams that inform automated decisions and actions. This approach enables continuous optimization of performance metrics such as cost efficiency and production speed while improving responsiveness to changing conditions.

Organizations are also prioritizing traceability and transparency in automated decision-making as regulatory expectations increase. Digital twins are central to this effort, serving as continuously updated representations of physical assets for design, monitoring and reporting purposes. At the same time, increased investment in smart manufacturing and connected infrastructure is enabling real-time coordination between physical systems and digital platforms.

Cloud strategies in the U.S. are evolving toward hybrid architectures that balance scalability with control over sensitive data and high-frequency workloads. Enterprises are placing critical AI inference closer to operations, using specialized silicon, while placing centralized analytics in the cloud. This strategy supports faster processing, reduced latency and improved system performance for mission-critical applications. It also enables tighter integration between digital platforms and physical operations, increasing enterprise agility, ISG says.

“The competitive advantage for enterprises is shifting from deployment of intelligent systems to coordinating how they operate across environments,” said Shirish Kulkarni, lead author of the report. “Midsize providers are acting as catalysts in digital engineering transitions, helping clients translate complex architectures into practical execution models.”

The report also explores other trends in digital engineering services, including increased focus on workforce upskilling and the convergence of IT and operational technologies to support integrated enterprise environments.

For more insights into the digital engineering challenges faced by enterprises in the U.S., along with ISG’s advice for addressing them, see the ISG Provider Lens Focal Points briefing here.

The report evaluates the capabilities of 46 providers across three quadrants: Augmented Design and R&D Services, Intelligent Operations and Connected Experiences and Integrated Platform and Application Services.

The report names Apexon, Bosch SDS, Coforge, Cyient, LTTS, Persistent Systems, Quest Global, Tata Elxsi, UST and Zensar Technologies as Leaders in all three quadrants. It names Birlasoft and Hexaware as Leaders in two quadrants each. Accion Labs, Altimetrik, Ascendion, eInfochips, Sutherland and Virtusa as Leaders in one quadrant each.

In addition, ITC Infotech is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrants. The report names eInfochips as a Rising Star in one quadrant.

In the area of customer experience, Nagarro is named the global ISG CX Star Performer for 2026 among midsize digital engineering services providers. Nagarro earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.

Customized versions of the report are available from Ascendion, Bosch SDS, Cyient, eInfochips, InfoVision and LTTS.

The 2026 ISG Provider Lens Digital Engineering Services (DES) Midsize Providers report for the U.S. is available to subscribers or for one-time purchase on this webpage.

About ISG

ISG (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 that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data and research, in-depth knowledge and governance of provider ecosystems, and the expertise of its 1,500 professionals worldwide working together to help clients maximize the value of their technology investments.

View source version on businesswire.com: https://www.businesswire.com/news/home/20260528336097/en/

Press Contacts:

Laura Hupprich, ISG
+1 203-517-3132
laura.hupprich@isg-one.com

Erik Arvidson, Matter Communications for ISG
+1 978-518-4542
isg@matternow.com

Source: Information Services Group, Inc.