KPMG, Microsoft team on e-business services

Big Five consulting firm KPMG and Microsoft today teamed to provide consulting and services to companies with Web businesses based on the Windows 2000 operating system.

KPMG and Microsoft, which have partnered in the past, said they plan to launch a new program that offers strategy, branding, creative design, Web technology integration, marketing and application hosting services using the Windows 2000 operating system.

KPMG will hire 500 consultants during the next 18 months who will be dedicated to the newly formed unit, dubbed the "Microsoft Dot.com Practice," the companies said in a statement.

Executives said they are dedicating roughly $50 million toward the program. They also said they won't overrule the option of taking an equity stake in some of their clients in lieu of payments.

The announcement comes a week before the software giant's Windows 2000 launch and at a time when the company has been busy carving a niche for itself as more and more companies jump online. Late last year, Redmond, Wash.-based Microsoft opened a multimillion-dollar advertising campaign to highlight Windows 2000 and related software used to build e-commerce sites, as part of a continuing reorganization intended to broaden the company's appeal among Internet firms.

Along with its competitors Andersen Consulting, Ernst & Young, EDS and other traditional services firms, New York-based KPMG has also been trying to shift its focus to front-office, Internet-related projects. Many of the more established firms have been scrambling to attract a piece of the dot-com crowd as competition escalates from smaller, more nimble Internet services firms, such as Scient, Viant, Proxicom, iXL, Lante and others.

As part of today's deal, the companies said they will also create a KPMG and Microsoft co-branded research and development lab that would allow customers to work directly with consultants on developing, integrating and delivering their new Internet businesses based on Windows 2000.

The program will give customers the option of outsourcing the hosting and management of their applications, the companies said. The full range of services will be offered to both domestic and international "dot-com" businesses.

As part of the deal, the companies said they will also create a KPMG and Microsoft co-branded research and development lab that would allow customers to work directly with consultants. A new lab is being built in San Francisco, with other locations in the works.