ISG Provider Lens™ Medical Device Digital Services - Digital Engineering and Product Development - U.S. 2025

The medical device industry is shifting to integrated, digital-first and patientcentric models

The global medical devices sector is at an inflection point in 2025, where the convergence of technology, regulation and patient expectations is reshaping how products are designed, approved and monitored. The industry is experiencing heightened digital adoption across three critical areas: digital engineering and product development; regulatory compliance, strategy and quality assurance; and post-market digital enablement. Further:

• In digital engineering, connected devices, AI and ML, digital twins and advanced prototyping are accelerating innovation cycles and enabling personalized, preventive care.

• In regulatory compliance, rapidly evolving frameworks such as FDA QMSR and EU MDR are forcing manufacturers to rethink compliance models, driving the adoption of digital quality management system (QMS), AI-enabled documentation and regulatory intelligence platforms.

• In post-market enablement, the shift from passive monitoring to real-time surveillance and patient engagement underscores the strategic role of data, interoperability and predictive analytics in ensuring safety, compliance and continuous innovation.

This evolution elevates IT providers from technology enablers to strategic partners, helping manufacturers optimize across the product lifecycle while balancing innovation with compliance.

Executive priorities and market challenges

Medical device executives face a dual mandate: innovate at speed while managing risk. Several priorities stand out across the ecosystem:

• Faster time to market: To stay competitive, manufacturers must accelerate R&D cycles without compromising compliance or quality. Providers leverage robotics-driven validation, AI-generated test data and digital simulation to shorten development timelines.

• Global regulatory alignment: Firms must navigate divergent global requirements across the U.S., EU and APAC. This creates pressure to embed regulatory intelligence early in product design and establish robust, digital-first QMS frameworks.

• Patient centricity: Usability, accessibility and adherence are executive imperatives, pushing demand for human-centered design, intuitive interfaces and consumer-grade device experiences.

• Data security and cyber risk: As connected devices proliferate, cybersecurity, data integrity and privacy are core challenges that providers must address across product lifecycles.

• Cost and sustainability pressures: Rising costs and ESG expectations drive the adoption of sustainable materials, ecofriendly device design and efficient supply chain models.

The ability to balance innovation with compliance and scale globally while maintaining quality is the defining challenge for 2025.

Trends and disruptive forces

The medical devices IT services market is being reshaped by several powerful forces:

• Generative AI (GenAI) is emerging as a cross-cutting disruptor, expediting test automation, regulatory documentation, surveillance and patient communications. Providers like Cognizant (Neuro® Edge) and Hexaware (RAQA.AI) are pushing boundaries here.

• Digital twin adoption is expanding beyond devices into biodigital twins of human systems, opening possibilities for personalized medicine and predictive diagnostics.

• Edge computing and 5G enable real-time monitoring in constrained environments, critical for wearables, implants and hospitalat- home models.

• Compliance automation reduces manual regulatory burdens through risk-based validation, AI-driven electronic quality management system (eQMS) and automated post-market surveillance, making compliance a competitive advantage.

• Conversion from real-world data (RWD) to real-world evidence (RWE) is foundational to regulatory approvals and product improvements, embedding analytics into post-market frameworks.

• Sustainability and circular design shape procurement and manufacturing strategies, as firms align device innovation with ESG and carbon-reduction goals.

These shifts are disruptive and differentiating factors in how providers position themselves in a competitive marketplace.

Provider landscape and competitive dynamics

The provider ecosystem is dynamic, with a mix of Leaders and Rising Stars shaping outcomes across quadrants:

• Leaders (Accenture, Capgemini, Cognizant, Deloitte, HCLTech, Infosys, LTTS, TCS and Wipro) dominate with end-to-end lifecycle capabilities, global delivery scale and proven regulatory expertise. They focus on embedding AI, digital twins and connected health ecosystems into their offerings.

• Specialists and Rising Stars (HARMAN, Hexaware and LTIMindtree) differentiate with digital-first accelerators, domain-specific platforms and cost-efficient delivery models, carving niches in regulatory AI, post-market analytics and embedded systems.

• Competition is intensifying around speed to market, compliance readiness and patient centricity, with providers racing to expand platform-driven solutions, ecosystem partnerships and sustainabilityfocused practices.

A notable dynamic is the growing overlap of IT provider service portfolios. Firms traditionally positioned around digital engineering and product development are extending into regulatory compliance and post-market enablement, embedding capabilities such as digital QMS, audit readiness and complaint handling into their offerings. Conversely, providers with a strong compliance and quality assurance focus are moving upstream by developing digital platforms, AI-enabled accelerators and engineering-adjacent services. At the same time, post-market specialists are expanding back into compliance and even into product development through Internet of Medical Things (IoMT), real-world data analytics and sustenance engineering. This convergence within the IT landscape is redefining competitive positioning. Buyers are increasingly seeking partners that can cover the entire device lifecycle, shifting vendor selection criteria from specialization in one niche to the ability to deliver integrated, end-to-end solutions.

Innovation, readiness and strategic response

Providers are actively retooling to meet the demands of a digital-first, compliance-intensive medtech market:

• Innovation levers: Robotics-driven testing, AI-driven regulatory synthesis, biodigital twins, and AR- and VR-enabled prototyping are reshaping development. Providers also focus on interoperability with electronic health records (EHRs), cloud-native platforms and predictive analytics for lifecycle continuity.

• Readiness factors: Providers that combine regulatory intelligence with digital transformation expertise are best positioned. Embedded compliance, scalable IoMT platforms and risk-based validation frameworks are fast becoming differentiators.

• Strategic response: Most providers are investing in partnership ecosystems (cloud hyperscalers, device manufacturers and startups), expanding proprietary accelerators and emphasizing human-centered design to improve patient adoption and engagement.

Providers’ readiness to blend domain expertise with digital accelerators will define their competitiveness over the next two to three years.

Outlook and recommendations

The outlook for medical device IT services is highly positive. Connected care models, regulatory modernization and post-market safety demands drive sustained growth. Providers that balance innovation, compliance and patient outcomes will secure leadership positions.

Recommendations for medtech manufacturers:

• Embed compliance early: Incorporate digital QMS, regulatory intelligence and risk-based validation from the start of product design.

• Adopt patient-centric design principles: Focus on usability, accessibility and adherence to maximize adoption and clinical outcomes.

• Leverage AI and digital twins strategically: Use them for efficiency, personalized care, predictive diagnostics and proactive compliance

• Choose providers with lifecycle breadth: Prioritize partners offering end-to-end support across development, compliance and post market, supported by global delivery and regulatory alignment.

Strategic takeaways for IT providers in the medical devices industry

• Convergence is inevitable: Engineeringled, compliance-led and post-market-led providers are no longer operating in silos. The winners will be those building integrated offerings across the device lifecycle.

• From niche to platform: Buyers increasingly value platform-based engagement models (IoMT hubs, regulatory accelerators and AI copilots) over fragmented services. Providers must transition from project-driven work to ecosystem plays.

• GenAI is a leveler: Early adoption of GenAI in regulatory, documentation and RWE analytics can create a competitive edge. However, differentiation will come from domain fine-tuning and integration into client workflows.

• Patient centricity is the new compliance: Usability engineering, remote monitoring and digital engagement tools are no longer addons; they are becoming core buyer selection criteria alongside safety and compliance.

• Global-local delivery matters: Regulatory complexity and regional nuances mean providers must combine global scale with localized expertise in the U.S., EU and APAC markets to stay competitive.

• Sustainability and cybersecurity are silent disruptors: Providers that can ensure ecocompliance and secure IoMT ecosystems will be better positioned as regulators tighten sustainability and data integrity mandates.

• Partnership ecosystems will define leadership: No single provider can cover the entire device value chain alone. Strategic alliances with hyperscalers, OEMs, medtech startups and data platform players will decide market leadership.

• Invest in sustainability and security: Treat eco-friendly design, cybersecurity and data integrity as core differentiators in global markets.

• Capitalize on real-world evidence: Use RWD-to-RWE pipelines for faster regulatory submissions, improved safety monitoring and continuous product enhancement.

The future belongs to providers and manufacturers embracing digital-first, compliance-embedded and patient-centric strategies, turning regulatory and post-market obligations into trust, innovation, and market leadership enablers.

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