Generative AI is poised to transform industries and contribute trillions of dollars annually to the global economy. In fact, it’s expected to add up to $4.4 trillion in value according to a report from McKinsey.
In this post, we’ll take a deep dive into the report and look at how it will reshape work by automating tasks and increasing labor productivity, as well as the significant impact it will have on sectors such as banking, retail & consumer packaged goods, as well as pharmaceuticals & medical products.
Let’s jump in.
Generative AI’s Impact on Productivity and the Global Economy
According to the report, generative AI can potentially boost productivity. How? Because it will eventually be able to save 60-70% of workers’ time through the automation of their work. Ultimately, it’s estimated that half of all work will be automated between 2030 and 2060.
McKinsey estimates that labor productivity will grow 0.1 to 0.6% annually through 2040, and—combined with all other technologies—could add 0.2 to 3.3% annually to productivity growth.
This boost in productivity, in turn, will have the potential to add trillions of dollars in value—McKinsey estimates between $2.6 trillion to $4.4 trillion—to the global economy annually.
Going hand-in-hand with this boost in productivity is a complete transformation of the workforce. More specifically, task automation is poised to change the anatomy of work by augmenting workers’ capabilities, in turn leading to accelerated workforce transformation and increased potential for technical automation.
According to the report:
“The acceleration in the potential for technical automation is largely due to generative AI’s increased ability to understand natural language, which is required for work activities that account for 25 percent of total work time.”
Generative AI will have a significant impact across all industry sectors—revolutionizing traditional business models and processes—but will especially be a boon to banking, retail & consumer packaged goods, and pharmaceuticals & medical products. In fact, it’s expected that:
- The banking industry could benefit from increased productivity of 2.8 to 4.7% of the industry’s annual revenues, or an additional $200 billion to $340 billion.
- Retail & consumer packaged goods could experience an increase in productivity of 1.2 to 2.0% of annual revenues, or an additional $400 billion to $660 billion.
- Pharmaceuticals & medical products could see a boost of 2.6 to 4.5% of annual revenues, or $60 billion to $110 billion annually.
These gains will be achieved by the generative AI-assisted activities listed in the chart below:
McKinsey found that approximately 75% of the value generated by generative AI use cases falls within four key areas: customer operations, marketing & sales, software engineering, and R&D. Here’s how that’s distributed:
- Customer operations: Applying generative AI could increase productivity at a value ranging from 30 to 45% of current function costs, or $404 billion.
- Marketing & sales: Marketing & sales could experience a 5-15% and 3-5% productivity lift of global functional spending, respectively, translating to $463 and $486 billion.
- Software engineering: Software engineering in corporate IT could increase productivity by 31% of global functional spending, amounting to $485 billion, whereas software engineering in product development comes in at 32%, or $414 billion.
- R&D: Generative AI could deliver productivity with a value ranging from 10 to 15% of overall R&D costs, amounting to $328 billion.
Now let’s take a look at these business functions across industries.
Ensure Your Business is Ready for What’s to Come
You too can explore the benefits of generative AI to promote greater productivity, workforce transformation, and overall economic growth. But where can you go to learn how this transformative technology can help your business thrive in the digital age? How can you unlock the immense potential of generative AI for your own organization?
That’s where Factored comes in.
Factored can build and scale data engineering, data science, data analytics, AI, and machine learning teams faster and more cost-effectively than trying to hire this talent yourself.
Contact us today to explore how our solutions can leverage generative AI to optimize your business processes and drive growth.