ISG Provider Lens™ Future of Work Services - Smart and Sustainable Workplace Services - U.S. 2024

With the economic slowdown and GenAI possibilities, 2024 is an year of cautious optimism for workplace

When we analyzed the Future of Work Services market last year, we defined 2023 as the year of stabilization. While the 2 – 3 years of the COVID-19 pandemic are increasingly becoming a distant memory, the changes it brought in the way people work persist and are redefining how organizations frame their new future of work strategy. Enterprises started adopting return-to-office (RTO) policies last year, a move that, according to multiple studies, employees did not receive well. Organizations are implementing hybrid ways of work policies, allowing their workforce the flexibility to work from a location of their choice but mandating in some instances where in-office presence is essential. These policies profoundly guide how enterprise workplace leaders define the technology and operational approach with their workforce.

Another major trend in the industry is the evolution of AI technology. After the advent of generative AI (GenAI) and OpenAI’s ChatGPT, enterprise workplace leaders are increasingly exploring opportunities to leverage the promising tech within the workplace technology ecosystem to improve efficiency and individual productivity. With a continued economic slowdown because of many geopolitical factors, leaders responsible for designing future work strategies are also experimenting with AI to explore possible cost optimization opportunities. With controlled budgets and the possibilities with AI, enterprise leaders are proceeding in 2024 with cautious optimism.

U.S. employers dealing with a growing workforce, RTO policies and flexible working

According to the U.S. Bureau of Labor Statistics, 168 million of the 330 million adults in the working population were employed, and the U.S. economy created 272 million jobs in May 2024. Currently, the unemployment rate is 4 percent, less than the long-term average of 5.69 percent. Many studies suggest that enterprises are confident with the growth of the U.S. economy and expect their head count to grow further in the coming years. The healthcare, government, leisure and hospitality industries lead the U.S. employment growth opportunities. Millennials comprise over onethird of the U.S. workforce, Gen X represents one-third, baby boomers represent one-fourth, and Gen Z and Gen Alpha represent about 5 percent. With five generations currently in the workforce, enterprises expect intergenerational dynamics impacting decisions related to career development, learning and development, and technology adoption.

Large U.S. technology enterprises strictly adopted RTO policies in late 2023 and forced their employees back to the office. This measure was followed by enterprise clients from other industries as well. The Financial Industry Regulatory Authority (FINRA) rules that forbade banks from disclosing and inspecting traders and brokers’ home offices expired in May 2024, and central U.S. banks are calling their staff back to the office. According to multiple studies, this move has backfired for many industries, resulting in dissatisfied employees and talent loss, and  employees are ready to leave the job for flexibility. In April 2024, the Federal Trade Commission banned noncompete clauses in employment agreements for U.S. workers, allowing them to switch careers to competitors easily. These
trends have significantly changed the approach of U.S. employers. According to multiple studies, less than half of large U.S. enterprises expect to call their employees five days a week, while nearly half accept the hybrid working norms. However, considering the nature of specific jobs that require in-office presence, enterprises need to make an informed decision about their hybrid and remote working policies to ensure that the criticality of job profiles and employee experience with flexible working styles are met.

Impact of increasing client expectations on workplace outsourcing

The aforementioned trends have impacted how the role of workplace technology-buying decision-makers has expanded. As enterprises make strategic decisions to transform their businesses and operations, workplace technology and service partner selection have become critical elements to consider.

This is reflected in how workplace services are outsourced to managed service providers. There is a decline in the number of standalone workplace services contracts, where enterprises partner with service providers that only manage the digital workplace technology that consists of end-user computing (EUC) environment (virtual desktop infrastructure [VDI], device management, field support and desktop engineering) and service desk workplace support services. These are the core services offered by a digital workplace service (DWS) provider or systems integrator, and workplace services-only contracts are not too focused on major business-level transformation.

On the other hand, workplace services-bundled contracts, where the enterprise partners with a service provider to manage a large-scale digital or business transformation along with managing the workplace technology ecosystem, are increasing in both number and value.

These trends indicate that workplace services can no longer be seen as horizontal IT infrastructure services. They will become increasingly focused on industry verticals, and providers that offer more verticalized offerings will stand out.

Workplace service providers struggle to showcase innovation

Although many large service providers are signing contracts with clients for bundled contracts, clients do not appreciate their capabilities concerning innovation. According to the ISG’s Voice of Customer survey 2024, clients have experienced high satisfaction when providers are open to constructive criticism and feedback, maintain high-quality work and ensure industry-specific regulations and policy compliance. However, clients were unhappy with the providers’ ability to help them adapt to emerging technologies, demonstrate novel working methods or identify  business processes to improve.

New possibilities and opportunities, thanks to GenAI

GenAI has opened up many possibilities for transforming the technologies that assist and support employees and help enterprise IT organizations in managing the entire workplace tech infrastructure. Employee experience remains a key priority for enterprise IT; workplace technology leaders seek opportunities to improve operations by leveraging this technology. AI has invaded all aspects of digital workplace technology that can impact the end-user experience.

Every unified communications and collaboration (UCC) technology provider has included GenAI as a critical product or service portfolio functionality. With the introduction of Microsoft Copilot and similar solutions, AI has become a key component of everyday individual productivity and applications that connect employees with their co-workers and assist in their content creation.

AI-enabled devices will soon become integral to the consumer market, starting with AI PCs and smartphones. Digital workplace technologies witnessed significant upheaval when smartphones, mainly iPhones, entered the workplace. Technology that disrupts and enhances end-user experience in the consumer world eventually finds a place in the enterprise work environment. Enterprises will seek assistance in adopting AI-enabled hardware and technologies for their employees.

GenAI provides significant opportunities to enhance the efficiency of service desk agents and reduce the cost of workplace support functions. It can assist in creating a support incidence knowledge base, categorizing incident tickets, improving user self-help, promoting proactive incident resolution and monitoring, and translating chat. Every service provider is integrating and leveraging GenAI technology in its digital workplace service portfolio.

Sustainability increasingly becoming an important ask

Sustainability has also become an important aspect that many U.S. enterprise clients are looking into. Although it was treated as a mandatory checkbox, U.S. clients are beginning to include carbon footprint reduction and sustainability elements in their digital workplace technologies. This initiative includes ensuring low energy consumption with devices, measuring the impact of technology usage on sustainability and reporting it on an ongoing basis to help workplace and enterprise leaders measure their progress against their environment, social and governance (ESG) goals.

This report delves into the areas mentioned previously and evaluates service providers that support U.S. enterprise workplace technology leaders in strategizing and managing their workplace technology environment.

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