Microsoft is investing $2.5 billion to launch a new company that will help businesses choose, build and deploy artificial intelligence tools that best suit their needs. The new venture, called Microsoft Frontier Company, will let organisations adopt AI while generating better returns on their investments.
The company said Microsoft Frontier Company will start with 6,000 employees who will work directly with customers. These teams will include forward deployed engineers (FDEs), technical consultants, support staff and sales professionals with expertise across different industries. Rodrigo Kede Lima, who currently leads Microsoft’s Asia business, will serve as the president of the new company.
Microsoft joins rivals in expanding AI implementation services
The announcement comes just two days after Amazon said it was investing $1 billion in its own forward deployed engineering initiative to support enterprise AI projects. AI companies Anthropic and OpenAI also launched similar FDE teams in May, partnering with banks, consulting firms and private equity companies.
Microsoft is also joining companies such as Palantir Technologies, which already helps customers deploy AI solutions using Nvidia’s open-source models. Earlier this year, Accenture and EY also announced partnerships with Microsoft to expand AI-focused implementation services.
Businesses want flexibility beyond a single AI model
Many large companies are no longer relying on AI from just one provider such as OpenAI or Anthropic. Instead, they are combining different AI models, including open-source technologies, and customising them using their own business data.
Microsoft Frontier Company will help customers select AI tools from Microsoft as well as other providers, integrate them with their internal data and business systems, and build customised AI solutions. Microsoft said customers will retain ownership of the work created through these projects rather than sending it back to Microsoft.
Patrick Moorhead, CEO of analyst firm Moor Insights & Strategy, told CNBC many businesses worry that relying too heavily on AI companies such as OpenAI or Anthropic could eventually help those AI labs compete against them in areas like coding and legal services.
Microsoft says customers need more AI choices
Microsoft has invested tens of billions of dollars in building data centers to support generative AI and has introduced several AI products. However, some of its offerings, including Microsoft 365 Copilot, have not yet seen adoption across businesses, while GitHub Copilot has lost market share to newer competitors.
Judson Althoff, CEO of Microsoft Commercial Business, said the new company was created after Microsoft realised that customers needed greater flexibility as more AI models entered the market.
“Three years ago, when we built Copilot, we made a mistake by binding it to OpenAI models only,” Althoff told Reuters. “You wanted models to amplify your intelligence and be able to have that sort of swappability for state-of-the-art and fine-tuning.”
He said Microsoft also recognised that different customers are at different stages of their AI journey. “Customers are in very different places right now, and trying to really figure out AI.” “Do they snap to one model from OpenAI or one model from Anthropic, or a family of models?” Althoff said in an interview eith Reuters. “Do they take it from a technology first mindset? How do they look at their existing business processes and operations?”
He added that customers care more about combining their own data with the right AI models than depending on any single technology provider. The ability to switch between different AI models has become increasingly important as competitors such as Google’s Gemini and China’s DeepSeek have advanced rapidly.
Microsoft sees long-term opportunity in enterprise AI
Althoff said Microsoft’s experience has shown that companies achieve the best results when they carefully build AI systems that protect sensitive business information while allowing access to different AI models.
“The combination of data and the models mattered more to the customer than any particular model, and they needed the flexibility to switch among AI models quickly,” he told Reuters.
He also said Microsoft has had the most success when it takes a “very methodical approach towards working with customers to build out an intelligence platform” that protects their intellectual property and allows them to take advantage of “any model in the ecosystem.”
Microsoft has offered implementation and support services for enterprise customers for years. In the March quarter, the company generated about $2.1 billion in revenue from enterprise and partner services, up 2.5% from a year earlier.
Althoff also credited Palantir with popularising the forward deployed engineer role. He said Microsoft’s approach differs because it supports a broader range of AI models, data connections and integrations.