UPDATED 20:06 EST / JULY 11 2023

AI

KPMG to invest $2B in AI and cloud as it expands partnership with Microsoft

The professional services firm KPMG LLP is expanding its partnership with Microsoft Corp. and will invest $2 billion into artificial intelligence and cloud services over the next five years.

The investments will help the roughly 265,000-person company to further automate various aspects of its tax, audit and consulting services, while enabling employees to perform faster analysis. That will mean they get to spend more time giving clients strategic advice and helping them integrate AI into their business operations, KPMG said.

KPMG Chairman and Chief Executive Bill Thomas told the Wall Street Journal in an interview today that the company’s plan is to enhance its workforce’s capabilities with AI, rather than use the technology to eliminate jobs. Any worker whose job can be automated with AI will be moved to a new role or offered training, he explained.

“I certainly don’t expect that we’ll lay off a lot of people because we’ve invested in this partnership,” Thomas said. “I would expect that our organization will continue to grow and we will reskill people to the extent possible and, frankly, create all sorts of opportunities in ways that we can’t even imagine yet.”

The partnership means KPMG will be one of the first companies to get access to an AI assistant called Microsoft 365 Copilot, before it’s launched to the public. The expanded deal with Microsoft will also mean KPMG brings more workloads to the Azure cloud platform

KPMG already uses Azure to access the OpenAI service for building and running its own AI applications. The OpenAI Service is exclusive to Azure because Microsoft also has a partnership with OpenAI LP, creator of the ChatGPT chatbot that popularized generative AI.

KPMG revealed that it expects to generate about $12 billion in additional revenue through the five-year partnership. It most recently delivered $34.64 billion in annual revenue in the year ended Sept. 30, 2022. The company is the smallest of the so-called “big four accounting firms,” the others being PricewaterhouseCoopers International Ltd., Deloitte Touche Tohmatsu Ltd. and Ernst & Young Global Ltd.

KPMG inked a multiyear partnership with Microsoft back in 2019, and since then it has been applying AI to various aspects of its business, with the technology helping clients eliminate bias in their decision making. Today’s deal means it will step up its use of AI, Thomas said, with a significant portion of its investment going on generative AI. He explained that businesses are eager to find ways to use generative AI technology to cut costs and increase business efficiencies.

In addition, KPMG will use generative AI to improve its work around environmental, social and governance issues. The technology can help to unify massive datasets for tax reporting and analysis of ESG-related transactions. It can also help with data analysis for audits, Microsoft CEO Satya Nadella told the Journal.

KPMG’s investment comes at a difficult moment for the accounting firm, which has struggled with slowing growth in its consultancy business as clients spend less on its services due to economic concerns. In June, its U.S. division announced it was laying off almost 2,000 staff.

The other big accounting firms have made similar investments in cloud and AI technologies to strengthen their consulting, tax and auditing businesses, and all three have also partnered with Microsoft. Deloitte in December said it would spend $1.4 billion on training employees on new technologies including AI, and followed up in April by announcing plans to establish a new generative AI practice.

PricewaterhouseCoopers said in April it will invest $1 billion in generative AI technology over three years, and is also partnering with Microsoft. Meanwhile, Ernst & Young last year announced it will spend $1 billion to enhance its audit technology capabilities with AI and other technologies. Another big consulting firm, Accenture Plc, said last month it will invest $3 billion on data and AI over the next three years. It also announced expanded partnerships with Microsoft and the two other big public cloud computing providers, Amazon Web Services Inc. and Google Cloud.

Image: vecstock/Freepik

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