There is an important pattern in the first half of this chapter. Isaiah alternately refers to the prophets and then to the words of the Lord unto the house of Israel. Verses 1,3,8,12 are addressed to the house of Israel, but verses 2, 4-7, 9-11 deal with the Lord's servants. The term "Israel" as used in this verse obviously has reference to Jacob, but more particularly to all of his descendants—the entire house of Israel.
The second half of this verse includes the phrase, 'in whom I will be glorified.' The Lord will be glorified through the house of Israel in the sense that the kingdom of God on earth is administered through the house of Israel. Therefore, all converts to the gospel of Jesus Christ must be adopted into this great family. John the Revelator explained that those who are sanctified by Jesus Christ are made 'kings and priests unto God' (Rev 1:6). This phrase could be rendered kings and priests in the house of Israel for it is through the house of Israel that the Lord establishes his church and reigns in his kingdom, for now and for all time. If the entire kingdom of God is run through the administration of the house of Israel, then the Lord is truly glorified by his servant, Israel.