Michael Harling, Managing Partner, KPMG

In an interview with Invest:, Michael Harling, managing partner at KPMG, discussed AI’s impact on professional services, Houston’s business climate, and KPMG’s focus on talent. “The opportunity to learn, advance, and be part of a strong community is central to how we recruit and retain talent,” Harling said.

How have client needs evolved over the past year, and what trends are shaping how KPMG delivers its services?

The obvious answer is AI. Everybody is interested in the productivity gains anticipated from artificial intelligence. Over the past year, there has been tremendous interest around how AI is developing, what applications will be available, and how it will be used.

In the past three months, particularly in Houston across energy and healthcare companies, we are starting to see organizations use these tools in a real, tangible way beyond theory. Technology companies may be on the cutting edge, but we are now seeing AI permeate into other industries.

At KPMG, we are developing bespoke AI-supported tools to deploy on our engagements, and we are seeing efficiency gains from that. Companies are still focused on the same priorities they have always had: operating more efficiently, increasing margins, growing revenue, and expanding their businesses. The difference now is that clients want to understand how to deploy these new technologies and accelerate their businesses.

Most people view AI as a productivity shift, similar to when the internet or email was introduced. People are anticipating growth in productivity across the nation and likely the world.

How is KPMG incorporating AI into its own operations and service delivery?

Our business is organized into three verticals: audit, tax, and advisory. We have AI tools supporting all three. These tools help with research, technical accounting analysis, ingesting large amounts of data, and summarizing information. Work that previously required many people over a long period of time can now be condensed significantly.

Traditionally, junior staff completed the first layer of work before seniors and managers reviewed it. AI is now being deployed at that first layer, and junior staff are moving more into review capacities where they apply human judgment.

AI is not perfect. It still makes mistakes, and people with subject-matter expertise need to review and refine the output. However, AI has been effective at gathering data, organizing it, and creating a first layer of analysis. That allows our people to move into higher-value work sooner.

Where are you seeing the greatest demand across audit, tax, and advisory?

We are seeing strong demand across all verticals. In audit, we are seeing strength among private companies through KPMG Private, which focuses on private and private equity-backed businesses. We are also seeing strong demand in deal advisory, as the M&A market has been active and tax remains strong.

The business environment is pretty good right now. There is turbulence because of everything happening globally, but many of those issues are viewed as short term. Overall, there is still a growth mindset.

In Houston, our biggest industry is energy, particularly oil and gas. We also have a strong healthcare sector and significant activity tied to the Port of Houston and the Houston Ship Channel. Houston is economically strong, and we are seeing population growth and businesses moving to both Houston and Texas.

What is driving Houston’s growth and attractiveness as a business market?

Texas and Houston have a business-friendly climate. Texas does not have an income tax, and both the state and local governments work to attract companies.

Houston is also a hospitable city. People from across the country and around the world come here, and it feels like a place that welcomes anyone willing to work hard and add value.

A large part of Houston’s population growth has come from international migration. Houston is a diverse city, and that diversity shows up in the restaurant and food scene. You can find almost any kind of cuisine here because people bring their cultures with them.

Outside of the heat and humidity, Houston is a great place. If you compare the opportunity to make money with the cost of living, Houston compares favorably. It has a reasonable cost of living for a city of its size, and the opportunities to grow and build a career are as good as anywhere.

That attracts talented people, and talented people create a virtuous cycle by generating more innovation and opportunity.

How is KPMG helping clients navigate complex risk environments, including regulatory changes and governance?

In tax, we stay abreast of potential legislative changes and work to remain at the forefront. We speak with clients about current regulations and where legislation is moving so they can prepare strategies not only to comply but also to minimize exposure.

A lot of the government regulation around prevailing wage, credits, low-carbon initiatives, and alternative energy creates opportunities for us to assist clients with compliance. Regulation is a major part of the tax practice because that is where many of these rules flow through.

How are you supporting clients in sectors such as energy and healthcare?

In energy, a lot of the focus is on implementing new technologies and processes, much of which is AI-enabled. Energy is commodity-driven, and there are many assets and businesses changing hands, so we have a robust M&A practice helping with deal execution.

In healthcare, one example is billing. There are many complexities in billing individuals, insurance companies, and government programs like Medicare and Medicaid. We do a lot of consulting around how technology, including AI, can make that process more efficient and accurate.

How is KPMG continuing to attract and retain talent in Houston?

KPMG has been recognized as one of the top companies to work for, and we put a great deal of effort into recruiting and retaining talented people. We try to create a strong culture and expose young professionals to learning opportunities and top-tier companies early in their careers.

In Houston, many of those opportunities are tied to large energy companies. The opportunity to learn, advance, and be part of a strong community is central to how we recruit and retain talent. Talented people like working with other talented people, and that creates a virtuous cycle.

How are you helping clients think about workforce strategy and upskilling?

We participate with organizations that focus on upskilling workers beginning at the middle school and high school levels and continuing through community colleges. We also have a high-school intern working with us, and we take an active role in development.

For clients, we provide training and guidance around new technologies becoming available. Nobody fully knows how to use all these tools yet, so we help clients understand how these technologies can be deployed and rolled out to their staff.

What are your top priorities for the Houston office, and what is your outlook for the sector?

Our top priority is to grow our business in the Houston market. Houston is dynamic and growing, and we want to grow alongside it. To achieve that growth, we need to attract and retain the best talent. We are a professional services organization, so we need the best professionals to be the best. We invest heavily in recruiting, retention, and culture.

The organizations that retain the most talented people the longest will ultimately come out on top. Those people will drive innovation, deliver value to clients, and inspire loyalty.

We are a people-centric organization. At the end of the day, our assets are our people, and so we view it that way, and we do everything we can to foster that.