Generalized and Personalized Federated Learning with Foundation Models via Orthogonal Transformations

Abstract: Federated Learning (FL) aims to train models across decentralized clients or devices holding local data without the need for centralized data collection, thus enhancing data privacy and security. However, achieving both generalization and personalization in heterogeneous settings remains a significant challenge. To address this, we introduce FedOT, a novel approach that leverages black-box foundation models. FedOT shares only a global task-dependent classifier across clients while locally adapting features through orthogonal transformations. By enforcing orthogonality, FedOT mitigates gradient conflicts across diverse clients, preserves semantic integrity, and achieves robust performance even in the presence of substantial data heterogeneity. The strategy of combining global and local parameters enables a more balanced approach for both generalization and personalization, outperforming baseline FL methods across multiple benchmarks. Furthermore, our extensive analysis confirms that joint optimization of global classifiers and local orthogonal transformations yields superior performance and suggests broader applicability.