Last week, KPMG announced a š° "$2Bn AI partnership" with Microsoft. Such collaborations signal dynamic shifts in the consulting and services industries. Let's dissect this trend.
Recently, we discussed how 3 hyperscalers have accumulated $240Bn+ in cloud commitments. This agreement isn't an exception.
A large part of the KPMG announcement indeed is "a multibillion-dollar commitment in Microsoft cloud and AI services over the next five years".
š Nevertheless, KPMG is wisely among the first to roll out AI to its 265K workforce, at the time when many large enterprises remain cautious about AI.
KPMG projects $12Bn growth in revenue from this investment over 5 years from boosted employee productivity. Given KPMG's $35Bn revenue, this implies a 6-7% increase over 5 years from AI. Reasonable, right?
But here's where it gets intriguing. KPMG is not alone. Accenture, PwC and Wipro among others are also betting big on AI. These four firms alone are rolling out AI to š 1.5 million employees. AI will become noticeable very soon.
š The most substantial AI commitment in the consulting and IT services industry was Accentureās $3Bn investment.
Accenture expects "Gen AI to be a mega-trend in the next decade, transforming 40% of all working hours." Another reason they're investing heavily in AI is apparent if you consider their recent New Bookings Revenue in Q3 FY23:
Consulting š» "high single digits decline" while
Cloud "very strong double digit growth" šŗ
Consulting new bookings were $8.9 Bn, or 52% of total new bookings.
Managed Services new bookings were $8.3 Bn, or 48%.
"We continue to experience growing demand to assist clients with application modernization and maintenance, cloud enablement and managed security services."
š The consulting market, worth $266.3Bn (Gartner '22), is being reshaped by digital business transformation, cloud migration, and now, AI.
But AI isn't just the biggest technological leap. It's the fuel for cloud consumption and a significant growth driver for services of consulting firms. Thatās where the win/win š incentives lie for consulting companies to work MORE closely with cloud providers and new tech.
šµ Talking about significant AI bets
In April, PwC US announced plans to invest $1B over the next three years. Given PwCās global workforce of 328K, this signals a significant industry shift.
Wipro too announced a $1Bn AI investment last week. One of the largest IT services and consulting companies, with a 265K employees, has promised to integrate AI into EVERY platform and solution used internally and offered to clients.
As we witness this AI [r]evolution, collaborations like KPMG and Microsoft remind us that success lies in embracing change, investing in future-ready tech, and leveraging synergistic partnerships.
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