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Does Gen AI mean the demise of service delivery centers?

Learn how Gen AI’s disruptions—and improvements—to the service delivery model are recalibrating the build-versus-buy equation.

Estimated read time: 5 minutes

As new technologies go, generative artificial intelligence (Gen AI) is on track to be the next GOAT (the “greatest of all-time,” for all you non–Tom Brady fans).

Look no further than a recent KPMG survey on Gen AI, in which three out of four executives expect it to be the most impactful technology in the next 12 to 18 months. That belief is held across industries, with 93 percent of US executives from a wide range of sectors in our survey saying that Al will provide new value to their businesses by making their organizations more productive, efficient, and competitive.

But Gen AI’s impact is not limited to work that happens within the organization. The technology’s “Gen” capabilities promise to further empower knowledge workers and even serve as highly productive “coworkers”—a development that will bring sweeping changes to long-entrenched service delivery models, and the associated resources, skills, and costs.

What’s more, Gen AI has real potential to improve efficiencies and reduce labor needs significantly, particularly in shared services like human resources (HR), finance, procurement, and information technology (IT), as we outline in our new report, “Will Gen AI mean the death of service delivery centers?”

In other words, prepare to watch your build-versus-buy equations go boom.

However, this transformation is not without challenges. Regulatory uncertainties, ethical considerations, and low digital literacy have put organizations at a crossroads. Businesses must be ready for these changes and invest in proper infrastructure and employee education to harness Gen AI’s full potential. Here’s a peek at what to expect and how to prepare.

Big targets, quick wins

Looking for a place to jump into the Gen AI pool? Look no farther than shared services. Across HR, finance, procurement, and IT—particularly within the service centers that these functions rely on—Gen Al has the potential to reshape traditional operating models. A few examples: 


HR: Gen AI can help leaders manage talent by automating tasks, streamlining onboarding, and answering routine questions accurately. This is especially true in organizations with many knowledge workers.


Finance: In our survey, 83 percent of leaders told us they’re already deploying Gen AI for tasks like forecasting and budgeting.


Procurement: Gen AI can guide users to submit requisitions, draft RFPs, evaluate proposals, and even ride shotgun on negotiations. In fact, 96 percent of procurement leaders said they’ve already begun implementing AI.


IT: Gen AI can write and review simple code, generate QA and testing scripts, and provide call center and digital self-service support.

By using Gen Al, companies may be able to reduce existing delivery center footprints by as much as 80 percent, according to our estimates. AI will not only make shared service workers much more productive, but also enable companies to centralize services that had previously been considered too specialized or reliant on business knowledge, such as contract authoring.

Bottom line: Future decisions to outsource will come down to technical capabilities, rather than scale and labor arbitrage.

We took the GOAT for a ride

Gen Al is already proving to be a powerful tool for the augmentation of knowledge workers’ everyday activities, and it will drive significant changes in workforce roles, skill requirements, headcount, and organizational structures.

Our adoption of Gen Al, KPMG GenAI for Advisory, is a good example. AI is already drafting status reports, compiling summaries of complex contracts, and documenting the outputs from group brainstorming sessions. Our teams are finding new ways to apply it every day to enhance productivity.

We’ve seen a significant reduction in the hours required in tasks that Gen Al supports. This ultimately frees up our people to be more innovative and creative, giving them time to tackle more strategic issues with clients, delivering more value more quickly.

The quality of Al-enabled shared services will support a much higher level of customer intimacy through natural language processing advancements that make customer service interactions more “human” than ever.

The many ways that Gen Al will fundamentally change service delivery centers will ultimately drive a wide array of benefits across an enterprise, all the way to the bottom line. Here are just a few: 


Increased efficiency and productivity: Automating manual and repetitive tasks will enable employees to focus on more productive activities. 


Cost savings: AI will reduce costs by automating procedures and improving efficiency. This can free up resources that can be allocated to other areas where human touch can make a bigger impact.


Greater accuracy and quality: Analyzing large amounts of data to identify patterns and insights can lead to more accurate and effective services, especially in functions such as finance and accounting.


Enhanced customer experience: New systems will create highly personalized content and experiences for customers.


Speed to innovation: Generating ideas, content, and prototypes much faster will enable service delivery centers to innovate and develop new products and services more quickly and efficiently.

The power inherent in combining natural language processing with large language models means that the hours someone would spend researching or developing a report can now be reduced to the mere minutes required to prompt Gen Al with the request and to review and approve the output.

Perhaps most important, the technology is accessible to everyone, not just to those with programming knowledge.

It’s time to make a plan

Gen Al is here. Its impacts will soon be felt across markets, businesses, and the workforce. The future belongs to organizations that adopt a service delivery framework that leverages the most appropriate internal, external, and blended capabilities.

At the same time, users of Gen Al have a responsibility to prevent harm to customers, businesses, and society. Those risks will grow and evolve as Al technology advances and becomes more pervasive, and as public pressure from regulators increases.

And as an early and enthusiastic advocate, we understand both the promise of Gen Al and the process and cultural changes that are required to realize its full potential safely and responsibly.

Will generative AI mean the death of service delivery centers?

Discover how Gen AI could be the swan song for shared services.

Explore more insights and opportunities:

Meet our team

Image of Ron Walker
Ron Walker
Managed Services US Leader, Advisory, KPMG US

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