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The global boom in generative products Artificial Intelligence will usher in an age of accelerated productivity and greater prosperity for some — and profound disruption for others, especially knowledge workers, according to a new report by consultants McKinsey & Co.

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A whole range of business activities, from sales and marketing to customer operations, will become more embedded in software, according to the study – with potential economic benefits of up to $4.4 trillion, or about 4.4 percent of global economic output. McKinsey Research Department.

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Generative AI will give people a new “superpower” and the economy a much-needed injection of productivity, Lareina Yee, the firm’s senior partner and chair of McKinsey Technology, said in a report.

The research examined 63 use cases of generative artificial intelligence, a type of tool that can generate content such as text or images when prompted, in about 850 occupations. Depending on how the technology is adopted and implemented, productivity increases Over the next 20 years, it could range between 0.1% and 0.6%.

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“Business leaders need to understand which activities can be changed and how they want to rethink that,” Yee said. “That’s a leadership choice and it’s also an execution.

The transformation will increase pressure on the workforce, particularly higher-paid knowledge workers, whose activities were “previously thought to be relatively immune to automation,” the report said.

A few years ago, McKinsey estimated that roughly half of workers’ hours worldwide are spent on tasks that can be automated. Now this number increases to 60-70 percent. Employees may find that their time is reallocated—or that their jobs disappear. “Employees will need support in learning new skills,” the report said. “Some will change professions.”

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It happens fast

About 75 percent of the potential value from applied generative artificial intelligence will come from four business functions: customer operations, marketing and sales, software engineering, and research and development.

Banks alone could generate an additional $200 billion to $340 billion from increased productivity, the report found, as new technology improves customer satisfaction, aids decision-making and reduces fraud through better monitoring. That would equate to a jump in operating profits of somewhere between nine and 15 percent.

In product research and development, the technology could bring productivity gains of 10 to 15 percent, McKinsey said. He cites the example of life sciences and the chemical industry, where artificial intelligence can generate potential molecules more quickly, speeding up the process of developing new drugs and materials. This could add up to 25 percent to the profits of pharmaceutical and health product companies.

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And it’s all evolving quickly. Earlier research by the firm suggested that 2027 would be the first year that AI technology would be able to match typical human performance in tasks that involve “understanding natural language”. Now McKinsey reckons it will happen this year.

Workers will need support in learning new skills

McKinsey report

The adoption of automation will be faster in advanced economies, where higher wages will make it feasible sooner than in poorer ones – and will affect white-collar jobs much more than physical tasks.

In this respect, it may be the opposite of the great technological improvements of the past, which often came at the expense of occupations where workers were less educated and paid less. Many performed physical tasks—like the British textile workers who broke new cost-saving looms, a movement that became known as the Luddites.

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In contrast, the new shift “will challenge multi-year degrees,” McKinsey said.

McKinsey’s workforce composition projections are consistent with a National Bureau of Economic Research working paper released this month by academics from Columbia Business School, the University of Maryland, the University of California at Berkeley and AI for Good.

This study also predicted significant work reorganization. “AI investments are associated with a flattening of the hierarchical structure of firms, with a significant increase in the proportion of lower-level workers and a decrease in the proportion of workers in middle management and senior roles,” he found.

Bloomberg.com

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