Tech firms must embrace AI fast or risk falling behind: KPMG report

AI can unlock $178 billion for tech firms, but the gap between potential and realised value remains wide, says KPMG International's report

The artificial intelligence (AI) boom is here, and tech companies need to act fast or risk losing competitive advantage, according to a recent report by KPMG International. According to The Intelligent Tech Enterprise report, while expectations and spending around AI are soaring, many tech firms around the world have yet to unlock the full value of their investments.

 

The study surveyed 1,390 executives globally, including 183 from the tech sector, and drew on over 500 AI engagements conducted by KPMG. 

It found that while 88 per cent of technology leaders believe AI adoption is crucial for competitive advantage, only 47 per cent are currently seeing significant returns. 

 

Shareholder pressure is mounting, with 62 per cent of tech firms under increasing demand to deliver immediate results. Yet, even AI front-runners are struggling to scale their efforts effectively. 

Many companies lack a coherent AI strategy, the necessary infrastructure, or mechanisms to build trust in AI systems. Only 27 per cent reported having a “transformational AI vision”, and just 20 per cent have fully integrated AI into their broader business strategy. 

“AI is triggering the biggest transformation wave the economy has ever seen. You want to be on the right side of that,” said Stanford professor Erik Brynjolfsson, who contributed to the report.

AI opportunities remain untapped

The report estimates the potential value of AI for 832 public tech companies at over $178 billion annually. This represents up to 16 per cent of earnings before interest, taxes, depreciation, and amortisation (Ebitda) for some firms, particularly in areas like customer analytics, operations execution and code generation. 

Still, KPMG noted a significant gap between what’s possible and what’s being achieved. While 70 per cent of respondents reported cost savings from AI, and 47 per cent cited high returns, challenges persist. Common barriers include data privacy concerns, talent shortages, and limited AI literacy across organisations. Just 44 per cent have clear plans for scaling AI or tracking its performance. 

“This is likely to be the largest organisational change most firms will face,” the report states. “You need a clear plan—and the courage to execute it.”

 

India’s tech sector ready to leap

India’s tech sector is ready to accelerate its AI adoption, according to Purushothaman KG, Partner and Head of Technology Transformation at KPMG in India.  “Eighty-one per cent of Indian tech firms plan to embed AI into products and services over the next year,” he said, highlighting the importance of strong governance, skilled talent and deep operational integration. 

With 63 per cent of Indian firms planning to increase AI spending by more than 10 per cent, the country has the potential to redefine its global competitiveness in the AI era.

 

What should tech leaders do?

To help tech companies close this gap, KPMG recommends five key actions:

1. Develop a clear AI strategy with a solid business case and roadmap that can evolve as technology and markets change.
2. Build trust in AI by using ethical frameworks, transparency tools, and systems that explain how decisions are made.
3. Make products smarter by designing them with AI from the start and constantly improving them based on user feedback.
4. Upgrade tech infrastructure, especially with intelligent cloud services and edge computing that bring data closer to where AI models run.
5. Embed AI in day-to-day operations and encourage teams and customers to adopt and work with AI solutions.

 

Grow with AI: Enable, embed, evolve

The report also lays out a three-phase roadmap for companies looking to grow with AI:

Enable: Building foundational capabilities, including training, ethics, and pilot projects.

Embed: Integrating AI into products, workflows, and operations at scale.

Evolve: Using AI to reshape business models and ecosystems, incorporating emerging tech like quantum computing.

 

Case studies from Australia and Japan show how companies are using this approach to improve productivity, trim headcount, and even influence national AI policy.

 

GenAI: Top use cases for tech firms

KPMG identifies the top areas where Generative AI (GenAI) is expected to create value:

• Performance optimisation
• Customer relationship management
• Code generation
• Operations execution
• Supply chain resource allocation
• Data governance
• Intelligent analytics
• Quality assurance
• Digital assistants and workflow automation