How AI will add trillions to the global economy according to Mckinsey report

The world of generative AI is undergoing a revolution according to a recent McKinsey report, which suggests that this transformative technology could add a value of up to $4.4 trillion to the global economy. As 2023 turns out to be the year of generative AI, tools such as ChatGPT have taken center stage, promising to bring about substantial changes across various sectors.

The report stresses that, unlike traditional AI, generative AI will have a substantial impact on high-income jobs that require an extensive educational background, especially in fields like engineering. The implications of this change could usher in a multitude of economic benefits and significantly improve the management of time for professionals in these sectors.

Contrary to the commonly held view that generative AI could replace the workforce, the majority of companies perceive generative AI as an opportunity to refocus the skills, time, and attention of human beings where they are most needed. The engineering industry, for instance, could leverage AI to automate mundane tasks, thus allowing engineers to focus on complex jobs that require human intervention and decision-making.

The McKinsey report outlines an estimated increase of two to eight trillion dollars of additional economic value from generative AI, taking the total economic impact of AI-based technologies to an astounding $17 trillion. This economic prediction surpasses the earlier estimates of the impact of non-generative AI.

In addition to specific industries, McKinsey report identified four critical business functions where generative AI could create significant value, accounting for approximately 75% of the total annual value derived from its adoption. These include software engineering, research and development, customer operations, and marketing and sales.

In the realm of software engineering, generative AI could quicken the coding process, assist in paired programming, and potentially increase productivity by 20 to 45%. The primary driver of this value would be the efficient time utilization during programming, freeing up engineers to focus on more intricate tasks and quality assurance.

Research and development is another area where generative AI holds tremendous potential. Particularly in pharmaceutical companies, where it could aid in the initial discovery of drug candidates. The report suggests that generative AI could raise productivity with a value of 10 to 15% of the overall costs in research, which could result in a $60 to $110 billion annual revenue increment for the pharmaceutical industry.

Customer operations could also see significant improvements with the help of generative AI, specifically in customer relations. Already in use in small-scale AI-powered digital assistants and chatbots, generative AI tools can improve customer self-service, reduce response times, and enhance the overall customer experience.

The world of marketing and sales isn't far behind. Generative AI could boost personalization on a large scale, create personalized messages and advertisements, draft advertising campaigns, blog posts, product descriptions, and more, thereby making a significant impact on overall business performance.

Beyond the scope of specific applications in business processes, the McKinsey report also emphasises the role of generative AI in reshaping the everyday life of professionals, especially engineers. For instance, it could increase the speed of information search, thus saving a substantial amount of time for engineers.

Based on the report, generative AI could automate 60-70% of employees' current working hours, allowing them to concentrate on more complex tasks that demand human creativity. The report predicts that up to half of today's working activities could be automated by 2060.

Despite the incredible progress in the field, the report stresses that our understanding of the impact of generative AI is still evolving. Adoption rates and return on investments are consistently on the rise, and the effects of generative AI on fields requiring natural language processing and creativity are only just being discovered. However, the potential of generative AI is vast, and as this technology continues to develop, it promises to bring significant economic benefits and revolutionize the way we work.