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The integration of generative AI tools has become a top priority for the leadership of several companies recently, which aims to maximize resources whilst minimizing cost. But how will this affect the global economy?
The global consulting leader McKinsey and Company, where GenAI is already in use by around half of the workforce, attempted to quantify the trend in a new report titled “The economic potential of generative AI.” According to McKinsey’s report, GenAI has the potential to add a whopping “$2.6 trillion to $4.4 trillion annually” to the global economy, almost similar to adding an entire country the size and productivity of the UK ($3.1 trillion GDP in 2021).
McKinsey’s analysts examined 850 occupations and 2,100 detailed work activities across 47 countries, representing over 80% of the global workforce, and constructed the report using quantifiable evidence, which makes the report trustworthy and insightful.
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A Bigger Impact on an Accelerated Timeline
According to McKinsey’s report, the potential economic impact of GenAI is $2.6-4.4 trillion annually, which is a 15-40% increase as compared to their previous estimates in 2017. This upward revision is due to fast yet successful adoption and implementation of GenAI tools by both small and large enterprises. Currently, GenAI and other technologies can automate activities that consume around 60-70% of employees’ time.
However, this does not mean that massive job loss must happen. Instead, the use of these tools could make jobs more efficient and increase productivity. McKinsey’s report states that this could contribute “0.2 to 3.3 percentage points annually to productivity growth.” Although the report notes, workers will require guidance in learning new skills, and some will have job transitions.
The report also reveals that workplace automation is increasing due to accessible GenAI, and “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.”
Jobs and Tasks Most Likely to be Automated by Generative AI and AI, Generally
Although generative AI has gained considerable attention, McKinsey’s report reveals that other AI applications and technologies will play a significant role in reshaping the global economy.
Generative AI is best suited for white-collar knowledge worker roles and tasks, whereas general AI, robotics, and automation might be more useful for physical tasks like manufacturing, construction, engineering, transportation, mining, and search and rescue. Sukharevsky believes that new tasks and jobs will be created. In the short term, the potential for prompt engineers increases. The full industry will also be readjusted in the long term.
Four Tasks with Most Value Add
According to McKinsey’s report, GenAI has a potential value add in four types of tasks: customer operations, marketing and sales, software engineering, and R&D- which will account for 75% of GenAI’s value add.
For customer operations, GenAI could help reduce human services by up to 50% depending on the existing level of automation. For marketing and sales, creating personalized and intelligent content with GenAI could improve productivity. In software engineering, GenAI can speed up the process resulting in 20 to 45% increased productivity, and for R&D, GenAI can help reduce costs by selecting and using materials more efficiently, leading to cost reductions in logistics and production.
AI as a Technology Catalyst for Economic Growth
Overall, McKinsey views GenAI as a technology catalyst” that pushes the industry forward towards automation and frees up the creative potential of employees. Sukharevsky believes that we are currently in the age of creativity and creators, even though GenAI technology is disrupting the white-collar workforce.
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FAQs
What is GenAI?
GenAI refers to generative AI. It refers to the machine learning system’s capability of generating outcomes without clear instructions on how to achieve them.
What is McKinsey & Company?
McKinsey & Company is a worldwide consulting firm that provides advisory services to some of the world’s largest businesses, governments, and institutions.
What is the potential value add of GenAI?
According to McKinsey’s report, GenAI has the potential to add “$2.6 trillion to $4.4 trillion annually” to the global economy.
Will the adoption of GenAI yield job losses?
McKinsey’s report states that there will be no significant job loss due to the rapid adoption of GenAI. However, workers will require guidance in learning new skills, and some will have job transitions.
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