Matthew Pine
Chief Operating Officer at Xylem
Thank you, Patrick. I am grateful and energized at the prospect of building on Xylem's momentum in creating our next phase of growth and impact. I'm also deeply grateful for Patrick's passionate, visionary leadership. His legacy is Xylem's bright future, having put Xylem firmly on a path of continuing profitable growth. The strength of our partnership is making it easy to deliver the continuity essential to all stakeholders in this handover as we approach the turn of the year.
And as Patrick said, our thesis is constant, our strategy is sound, and we are committed to our long-range plan. Our team is solving customers' greatest water challenges with the most advanced platform of solutions in the world. In a fragmented, complex market, that integrated offering is a distinctive, competitive advantage. The opportunity ahead of us is to make it easier for even more customers to access the full range of capabilities they need to solve their most critical water challenges. In the process, we'll grow our penetration, our profitability, our durability, and our impact. The team and I look forward to sharing more color about the next phase of our growth at an Investor Day in May next year. We'll provide a further update on our combined company opportunity and long-range plan then.
In the meantime, I'm pleased to share our nearer-term outlook. I'll provide a brief update on our Evoqua integration, and then a picture of what we expect in our end markets over the next period. And then finally, I'll ask Bill to provide guidance for the remainder of the year.
Moving to slide 12, as you can see, the integration of Evoqua has gained quick momentum, and the team has come together remarkably fast. There's great collaboration, and we have the benefit of bringing two highly complemented cultures with a similarly strong sense of purpose together. We committed $140 million of cost synergies within three years, as well as exiting 2023 with a $40 million run rate. And as Patrick mentioned, that's well on track, but the rationale for the combination has always been about growth, the opportunity to create more value serving customers with our combined capabilities.
In utilities, we'll deepen our penetration, especially with the addition of Evoqua's applied product technology offerings through our water infrastructure segment. The combination allows us to provide even more comprehensive treatment solutions in both clean water and wastewater. In industrial, we will scale our presence in attractive verticals with services offerings of ISS. We see long-term market expansion in growing verticals such as microelectronics, power, life sciences, and food and beverage and geographically, we will scale Evoqua's products and solutions internationally, including the services business, by leveraging Xylem's global distribution platform.
Both Xylem and Evoqua were market leaders on their own, but together, we're in even a stronger position. We are already seeing the benefits of scale, reach and integrated offerings, and a robust pipeline of global opportunities, as well as the combined wins both teams are posting. And as we integrate our two businesses even more deeply, we'll take advantage of the opportunity to optimize our portfolio for growth. That will include structuring our offerings in ways that are matched to how our end markets address water management. The job is to make it even simpler for them to access solutions they need, and we're already hearing how customers appreciate having fewer vendors to coordinate across multiple domains.
Now, let's turn to slide 13, and I'll cover the outlook for our end markets. Our outperformance in the first three quarters of the year provides great momentum to build on. I especially want to echo Patrick's shout out to all of our teams for delivering such a standout performance this year, and in the third quarter. It's that kind of commitment and discipline that demonstrates the team's ability to execute through a dynamic macroeconomic environment. That said, we continue to take a balanced outlook and are monitoring signs of softness on a regional level, particularly in China, and some end markets addressed by our Applied Water Segment.
As a reminder, our 2023 outlook is expressed on an organic basis. At a high level, we anticipate that utilities demand will continue to be resilient, and industrial demand will provide steady growth. Utilities compromise approximately 45% of revenue. They continue to show healthy demand, and we continue to expect growth of mid-teens. On the clean water side, we continue to see robust demand for our AMI solutions. On top of that, we're driving backlog execution on improved chip supply, and we're seeing even more traction on solution selling with our digital platform as customers increasingly value bundled offerings.
We now anticipate growth of mid-20s up from low-20s previously. On the wastewater side, opex is expected to remain resilient in developed markets, alongside steady capex spend across regions, underpinning demand. We expect to see high single-digit growth in wastewater overall. Turning to industrial end market, which is about 45% of our revenue, we now expect global growth of high-single digits up from mid-single digits. Developed markets continue to be resilient, although there are pockets of moderation in emerging markets.
Lastly, in building solutions, which is about 10% of our revenue, we continue to expect growth of mid-single digits, driven by steady replacement business, particularly in commercial applications. Overall, the demand outlook continues to be positive despite some variability in macro indicators. While the organic view does not include Evoqua, the demand profile in ISS is resilient on a foundation of recurring revenues, further increasing the durability of our business.
Now, I have the pleasure of turning the call over to Bill for the first time to walk through our Q4 guidance.
