OpenAI launches professional services business with $4B investment

OpenAI Group PBC today unveiled a new business unit, The OpenAI Deployment Company, that will help companies adopt its artificial intelligence models.

The subsidiary is launching with $4 billion in funding from the ChatGPT developer and more than a dozen other backers. The biggest external investor is asset manager TPG. SoftBank Group Corp., Bain Capital, and Brookfield also participated in the round.

Axios reported today that OpenAI is keeping a majority stake. According to the publication, the AI provider pledged to deliver a minimum return of 17.5% to The OpenAI Deployment Company’s external backers. The investment terms reportedly also include a profit cap. 

The funding round, which reportedly values The OpenAI Deployment Company at $14 billion, included contributions from several technology consulting firms. The group includes Bain & Co., Capgemini SE, and McKinsey & Co.

The OpenAI Deployment Company will help large enterprises deploy its parent company’s AI models in production. It plans to go about the task by sending forward deployed engineers, or FDEs, to client organizations’ offices. An FDE is a software developer who works at one of a client organization’s corporate hubs alongside its in-house engineers.

OpenAI says that its FDEs help customers deploy its models through a multistep process. First, they review potential ways that a company can apply AI and identify the use cases with the biggest possible return. From there, they implement a “small number of priority workflows”. Those priority workflows are presumably proof-of-concept deployments designed to demonstrate the business impact of OpenAI’s suggestions.

After wrapping up the initial prototyping phase of a project, the OpenAI Deployment Company moves on to building production-grade AI software for the client. It can also complete certain related tasks. A company could, for example, ask The OpenAI Deployment Company to integrate a newly built AI system with its existing applications. According to OpenAI, its FDEs can “redesign organizational infrastructure” when necessary.

The OpenAI Deployment Company plans to use its $4 billion funding round to expand its business operations. It will make acquisitions to speed up the effort. The OpenAI unit disclosed its first such transaction today in conjunction with its launch announcement. 

The subsidiary has acquired Tomoro AI Ltd., a London-based technology services firm that helps companies build AI software. Its client roster includes Virgin Atlantic Airways Ltd and Tesco plc, the UK’s largest retailer. 

OpenAI is gaining about 150 FDEs and other technical professionals through the deal. According to the company, the new hires will help clients integrate its AI models with their applications, data repositories and cybersecurity controls. OpenAI didn’t disclose the deal’s financial terms. 

The company’s move into technology consulting, a multibillion-dollar market, may help boost investor interest in its upcoming public offering. The launch of the OpenAI Deployment Company comes a few months after OpenAI launched an advertising business and an e-commerce offering. 

OpenAI’s entry into the professional services market may prompt Anthropic to follow suit. Smaller enterprise AI providers may do the same. In such a scenario, OpenAI’s partnerships with TPG and the other institutional investors that backed its new subsidiary’s funding round could prove to be a valuable differentiator. 

In April, the Financial Times reported that OpenAI was planning to help The OpenAI Deployment Company’s investors deploy AI across their portfolio businesses. The ChatGPT developer stated today that its “investment and consulting partners sponsor more than 2,000 businesses around the world.” In addition to representing a potentially significant revenue source, those companies could help OpenAI refine its professional services offering by providing early customer feedback.

Image: OpenAI