Europe is accelerating its adoption of digital engineering innovations faster than any other region, according to the newly released Information Services Group (ISG) report. As more industries scale their Industry 4.0 initiatives, European enterprises are blending physical and digital capabilities to reshape workplaces and deliver hyper-customised user experiences.
“Europe is significantly advancing its digital capabilities, which could potentially modernise the entire value chain from concept to after-sales support,” said Matteo Gallina, ISG digital engineering solutions lead. “The paradigm shift toward agentic AI could transform industrial operations by enabling more automated decision-making, improving operational efficiency and streamlining production processes.”
The report finds that enterprises and service providers across Europe have rapidly moved from genAI experimentation to full-scale execution. Companies are now using genAI to automate design processes, create hyper-personalised customer experiences, and generate synthetic data to optimise product testing and model development. Service providers are building extended teams to deliver comprehensive solutions that span product ideation, design, development, and prototyping.
Key technologies are driving the transformation
GenAI enables tailored customer experiences by designing outcomes aligned to specific needs, while digital twins offer real-time insights and predictive maintenance of industrial assets. Digital thread technologies ensure complete traceability across a product’s lifecycle, delivering critical operational transparency.
Service providers are also adopting model-based systems engineering (MBSE) to create smart, integrated products across mechanical, electrical, and software disciplines. This evolution is particularly impactful in Europe’s automotive and manufacturing sectors, reinforcing the region’s position as a global hub for innovation.
Sustainability efforts
Additionally, the report highlights the rising sustainability efforts, with service providers increasingly adopting carbon-efficient software development practices. Composable architecture is playing a key role, enabling flexible, low-carbon system development and rapid response to market shifts.
The 2025 report evaluates 50 providers across four quadrants: Design & Development, Integrated Customer/User Engagement, Intelligent Operations, and Platform & Application Services. Accenture, Capgemini, Cognizant, HCLTech, Infosys, TCS, and Wipro lead in four quadrants each. Meanwhile, HARMAN Tech Services, NTT DATA, and Tech Mahindra are leaders in three quadrants each. Rising Stars include Akkodis, GlobalLogic, ITC Infotech, LTTS, and NTT DATA.