Many big companies are currently embracing generative AI tools, but what impact will this have on the economy? McKinsey & Company, a global consulting leader, has attempted to quantify the trend in a new report titled “The Economic Potential of Generative AI”. The report finds that GenAI could add $2.6 trillion to $4.4 trillion annually to the global economy.
To construct the report, McKinsey’s analysts examined 850 occupations and 2,100 detailed work activities across 47 countries, representing more than 80% of the global workforce. The $2.6 trillion to $4.4 trillion economic impact figure marks a huge increase over McKinsey’s previous estimates of the AI field’s impact on the economy from 2017, up 15% to 40% from before. This upward revision is due to the incredibly fast embrace and potential use cases of GenAI tools by large and small enterprises.
Furthermore, McKinsey finds “current generative AI and other technologies have the potential to automate work activities that absorb 60% to 70% of employees’ time today.” However, this does not necessarily mean massive job loss is inevitable. According to Alex Sukharevsky, senior partner and global leader of QuantumBlack, McKinsey’s in-house AI division and report co-author, “You basically could make it significantly faster to perform these jobs and do so much more precisely than they are performed today.” What that translates to is an addition of “0.2 to 3.3 percentage points annually to productivity growth” to the entire global economy.
The report also notes that “workers will need support in learning new skills, and some will change occupations. If worker transitions and other risks can be managed, generative AI could contribute substantively to economic growth and support a more sustainable, inclusive world.”
The advent of accessible GenAI has pushed up McKinsey’s previous estimates for workplace automation: “Half of today’s work activities could be automated between 2030 and 2060, with a midpoint in 2045, or roughly a decade earlier than in our previous estimates.”
While generative AI has captured the public interest and imagination, McKinsey believes other AI applications and technologies will also play a major role in reshaping the global economy. “When people talk today about GenAI, they sometimes view it as interchangeable with AI and robotics, but it is important to be precise,” Sukharevsky said.
Specifically, McKinsey’s report found that four types of tasks – customer operations, marketing and sales, software engineering, and R&D – were likely to account for 75% of the value add of GenAI in particular. “Examples include generative AI’s ability to support interactions with customers, generate creative content for marketing and sales, and draft computer code based on natural-language prompts, among many other tasks.”
For customer operations, McKinsey said its “research found that roughly half of customer contacts made by banking, telecommunications, and utilities companies in North America are already handled by machines, including but not exclusively AI. We estimate that generative AI could further reduce the volume of human-serviced contacts by up to 50%, depending on a company’s existing level of automation.”
For marketing and sales, McKinsey found that creating more personalized and intelligent content with GenAI “could increase the productivity of the marketing function with a value between 5 and 15% of total marketing spending,” and increase the productivity of sales spending 3 to 5% globally.
In software engineering, McKinsey sees the technology speeding up the process of “generating initial code drafts, code correction and refactoring, root-cause analysis, and generating new system designs,” resulting in a 20 to 45% increased productivity on software spending.
When it comes to R&D, McKinsey believes generative AI will “help product designers reduce costs by selecting and using materials more efficiently. It can also optimize designs for manufacturing, which can lead to cost reductions in logistics and production.”
Overall, McKinsey views GenAI as a “technology catalyst,” pushing industries further along toward automation journeys, but also freeing up the creative potential of employees. “I do believe that if anything, we are getting into the age of creativity and the age of creator,” Sukharevsky said.
Asked what types of AI tools he used in particular, Sukharevsky declined to comment specifically, saying he liked to test new ones out nearly every day. He did confirm that while the data for the report was analyzed and fetched in part by AI, the entire 2023 McKinsey report on the economic impact of AI was written by human authors.
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