KPMG and Microsoft are expanding their relationship. The accounting firm plans to invest at least $2 billion in the tech giant’s AI and cloud services business over the next five years. KPMG US Chairman and CEO Paul Knopp joined Yahoo Finance Live to talk about the deal and what it means for the company’s employees and customers.
video transcript
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– KPMG invests billions in Microsoft cloud and AI services. Over the next five years, at least $2 billion will be invested to reshape professional services across different areas of KPMG and Microsoft.
Now, I’d like to invite Paul Knopp, KPMG US Chairman and CEO, to tell us a little more about it and what it means for your business. Nice to meet you, Paul. Thank you so much for coming to the studio here.
Paul Knopp: Sheena, I’m glad you’re here.
– Well, congratulations on this investment. Indeed, this seems like a big step forward for KPMG. Why AI when we’re talking billions of investments? Why was this investment right for your company?
Paul Knopp: Indeed, generative AI is an emerging technology. Thinking back late last year, it appeared for the first time. And we needed a way to accelerate the development of that technology in order to get it to our clients faster in the future.
We thought a partnership with Microsoft would be the perfect way to go. We have been partnering with Microsoft since 2000, and this time we are strengthening that partnership. The company has not only invested $2 billion in his five years in solutions for clients, but also aims to enhance the experience of today’s employees. Because these tools allow you to do things more creatively.
So we’re really excited about that. Over the next few years, he expects to generate an additional $12 billion in revenue. Its revenue will come from sources such as cybersecurity solutions, moving to the cloud, embedding or integrating generative AI into these cloud services, as well as innovative new applications that have yet to emerge but are currently being worked on. .
– Well, Paul, that $2 billion or $12 billion that you mentioned is certainly a significant value. Can you be a little more specific about where you’re seeing growth? How do you see this technology evolving?
Paul Knopp: That’s right, Akiko. You can definitely see it being deployed in almost every part of an organization, regardless of sector. For example, we can incorporate this technology into sales and marketing, engineering production and finance, and through the integration of this technology we can make these operations more efficient and effective.
It is also true that it can be embedded in processes such as taxes. And now, with the KPMG Digital Gateway, we’re working on reskilling that tool with generative AI. So there’s very little part of the organization that this doesn’t affect, and that’s why it’s so interesting.
– And how do you communicate this to your employees? Because many workers out there are a little nervous about what AI will bring to their jobs. So I think the question here is in two parts. How does that affect their day-to-day responsibilities? Do you think this is affecting headcount levels?
Paul Knopp: of course. Looking back over the last 40 years of recent history, every major technology disruption I have witnessed since I was at his KPMG has not been accompanied by a significant reduction in personnel. Because new economic activities and new ideas tend to require more people. And it turns out that generative AI is no different.
Therefore, what we are looking at is the need for people to ensure that it is safe, secure and reliable. We need someone to interpret the results of our generative AI. Neural networks and large language models provide this, and they’re not perfect either. And you’ll also need data scientists to help you collect the right kind of data and interpret that data. And, of course, you’ll need people to help develop these solutions.
So, we believe that with generative AI and the investments we’re making, the investments we’re making with Microsoft, we can actually add headcount in the long term.
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– – think about.
Paul Knopp: Yes, I’m sorry, Akiko-san. What I meant was that there will definitely be a shift of certain activities, such as the more mundane activities of humans to technology. But by doing so, you can improve their skills and get them to do more value-added work.
– It sounds like you’re referring to disruptions that don’t necessarily mean job losses. I touched on the security part a little bit. Could you elaborate on that? What are your thoughts on the elements of safety and reliability? Given that this technology is still in its very early stages, what kind of safeguards are you considering?
Paul Knopp: Well, these tools and technologies should be developed in a safe and secure environment. So, for example, when we use ChatGPT type tools at KPMG, we are running on a secure platform with enterprise security provided by Microsoft. This is another reason why we want to join this partnership because of their excellent technology.
Therefore, in helping our clients develop these solutions, we focus not only on the security built or designed around this technology, but also on the governance around this technology. This will be a very important part of the development of this technology as we move forward. It is used in a safe and secure environment to ensure that it produces reliable and accurate information that can be used by the enterprise.
– Paul, we got the inflation report this morning which shows that inflationary pressures are easing in such an uncertain environment, but the Fed is widely expected to raise rates again later this month, with a It’s too early to tell what will happen. . How do you think about this as CEO, assessing investments and opportunities like these today and trying to figure out what makes sense and what doesn’t make sense in this environment?
Paul Knopp: Well, looking at this environment, I think we need to invest for the future. And as we invest in this deal with Microsoft, we plan to invest in other generative AI and cloud-based technologies as well. So, at this point, there is no doubt that the last few months have added more uncertainty.
Some of that is driven not only by rising interest rates, but also by tighter credit conditions. There is some uncertainty about spending by businesses and consumers. Therefore, it should be taken into account.
But looking longer term, say 3-9 months, 3-5 years, I’m very optimistic for several reasons. It’s about the types of technology we’re talking about today and the spending on that technology, the anti-inflation laws, and all the spending that will be associated with the transition to cleaner energy sources.
The fact that structural imbalances still exist in the labor market, which will lead to considerably tighter conditions in the labor market. And very importantly, there is a trend toward increased reshoring due to supply chain risks. We expect that to continue, and we expect it to be a pillar of strength for the US economy as well.
So we think it’s a very resilient and strong economy. But in the next three, six, nine months, we may lose a little more clarity.
– Okay, Paul, nice to meet you. Thank you very much for coming here to the studio. KPMG US Chairman and CEO Paul Knopp said:
Paul Knopp: Thank you very much.
