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- Generative AI is a revolutionary technology that has the potential to automate up to 70% of work hours.
- The technology could generate annual value equivalent to $2.6 trillion to $4.4 trillion in global corporate profits.
- The most significant impact is expected to be in the banking, high tech, and life sciences sectors.
- Generative AI could increase labor productivity by 0.1% to 0.6% annually until 2040.
The impact of generative AI, a revolutionary technology that mimics human-like decision-making capabilities, is set to skyrocket, according to the latest report from the McKinsey Global Institute. This cutting-edge artificial intelligence innovation has the potential to automate up to 70% of work hours by taking over various tasks, driving businesses and individuals to assess its real-time impact.
The McKinsey Global Institute’s research on generative AI and productivity reveals staggering figures. It suggests that generative AI could generate annual value equivalent to $2.6 trillion to $4.4 trillion in global corporate profits. By examining 63 different use cases, the study estimated that generative AI will significantly enhance productivity across various industries. Some of these use cases include customer support interactions, creative content generation for marketing and sales, and natural-language prompted software code drafting. The technology could increase the value of productivity from artificial intelligence and analytics by 15% to 40%, which would roughly double as generative AI becomes more widespread in workplaces worldwide.
Among different sectors, banking, high tech, and life sciences are expected to witness the most significant impact in terms of additional industry revenue. For example, in the banking sector, the technology could generate an extra $200 to $340 billion annually if all use cases were implemented. However, other industries like retail and consumer packaged goods won’t be left behind, with potential additional operating profits ranging from $400 billion to $660 billion per year from the utilization of generative AI.
The research indicates that about three-quarters of the value generated by generative AI will originate from four key areas of business: customer operations, marketing and sales, software engineering, and research and development. In some instances, the technology will function as a virtual expert, providing information and suggestions to address retail customer queries or develop creative marketing content. In other cases, it will serve as a virtual collaborator, assisting teams in creating candidate molecules for drug development or refining software code for engineers.
A substantial portion of generative AI’s value lies in its potential to boost productivity across the economy, provided employees affected by the technology transition to new work activities. The research estimates that generative AI could increase labor productivity by 0.1% to 0.6% annually until 2040. When combined with other technologies, automation could contribute an additional 0.2 to 3.3 percentage points to productivity growth.
The current capabilities of generative AI, when combined with other technologies, could potentially automate 60% to 70% of the tasks that employees currently perform, such as drafting emails or responding to customer inquiries. This marks a significant advancement compared to the previous estimate in 2017, which suggested that only 50% of work activities could be automated using the available technologies at that time.
The increased potential for technical automation is likely to accelerate the pace of workforce transformation. Scenarios developed by the McKinsey Global Institute suggest that, accounting for the effects of generative AI, around half of today’s work activities could be automated between 2030 and 2060. The midpoint of this estimate falls around 2045, approximately a decade earlier than previous projections. While the global workforce may take decades to fully adopt these technologies, individual companies can leverage generative AI for a competitive advantage by transforming their operations more rapidly.
The successful integration of generative AI into the workforce will require providing employees with support to learn new skills that enable them to collaborate effectively with the technology and adapt to changing roles. Corporate leaders are urged to reevaluate core business processes, identify the most suitable applications of generative AI, and determine the new skills and capabilities required by their workforce. Only through active management of the transition to generative AI, including careful evaluation of associated risks, can the substantial economic potential of this technology be fully realized.
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