Since OpenAI unveiled ChatGPT in November 2022, much has been said about the impact that generative AI could have on the world but everybody, from doomsayers to star-struck enthusiasts, agrees that this impact will be massive. In fact, it already is.
According to a report released in June by McKinsey, the emerging technology could boost the global economy by as much as $4.4 trillion annually, adding up to 40% to the $11 trillion-$17.7 trillion that non-generative AI could unlock. Back in 2017, the consultancy had estimated that AI could generate up to $15.4 trillion in total; these revised figures tell you everything you need to know about how recent progress in generative AI is supercharging expectations.
Indeed, the successive releases of ChatGPT and of GPT-4 barely five months later, of Google’s Bard and Chinese search giant Baidu’s Ernie Bot soon thereafter, not to mention countless other challengers, are both the drivers and outcome of today’s race to invest in generative AI. According to McKinsey, global funding for generative AI reached a total of $12 billion in the first five months of 2023 alone. From 2017 to 2022, venture capital and other private external investments in generative AI increased by an average compound growth rate of 74% annually, vs 29% in artificial intelligence overall, finds McKinsey, adding that “generative AI-related companies based in the United States [where external private investment in generative AI is largely concentrated] raised about $8 billion from 2020 to 2022, accounting for 75% of total investments in such companies during that period.”
Productivity boost
The reason for this investment frenzy is generative AI’s potential ability to drastically improve productivity, augmenting employees’ capabilities through the automation of certain individual tasks. Today, these tasks absorb 60 to 70% of employees’ time but half of them could be automated, enabling labour productivity growth of 0.1 to 0.6% annually through 2040 and additional 0.2 to 3.3 percentage points annually if generative AI is combined with all other technologies, says the McKinsey report. Meanwhile, software developer productivity has already increased 15-20% in some cases, thanks to generative AI tools whose use could raise annual labour productivity growth by around 1.5 percentage points over a 10-year period, according to a Goldman Sachs July report,.
No wonder the GCC region is going full throttle on generative AI too. According to a Strategy& Middle East report unveiled last week, the technology could unlock $23.5 billion in economic benefits for the region by as early as 2030, realising about $9.9 of economic growth for every $1 invested into it. Saudi Arabia and the UAE, which have both been investing heavily in their respective tech ecosystems, are ideally positioned to benefit the most from it, with the Kingdom projected to reap $12.2 billion and the UAE $5.3 billion, says the report.
According to McKinsey, all industries could eventually benefit from generative AI but about 75% of the value that it could deliver falls across four areas: customer operations (supporting interactions with customers), marketing & sales (generating creative content), software engineering (drafting computer code), and R&D. In the GCC, media & entertainment would be the sector most impacted with $8.5 billion, followed by healthcare ($3.8 billion), banking & financial services ($3.5 billion), and IT & telecommunications ($2.9 billion), says Strategy& Middle East.
Man + machine
Excitement over generative AI is palpable but several factors would condition the full realisation of its benefits, from the rate of technology adoption to the upskilling of workers, the redeployment of their time into other activities, and executives’ rethinking of their core business processes. To maximise impact, the Strategy& Middle East report advises a strategic deployment of AI:
- Focus on achieving early, if small, wins that can rally support, choosing generative AI use cases that align with strategic goals and provide tangible value;
- Collaborate with chief data, information, and technology officers to swiftly tackle any deficiencies in data capabilities;
- Build strong strategic partnerships to quickly deploy experienced talent and capabilities while attracting and retaining top in-house data science talent.
As Tony Karam, Partner at Strategy& Middle East, said in the report, “Success in [generative] AI hinges upon talent acquisition. The Middle East must confront challenges stemming from local shortages in advanced data science skills. In this global race for talent, establishing robust strategic partnerships is imperative for GCC companies aiming to swiftly deploy experienced talent and capabilities. Simultaneously, cultivating an environment that attracts and retains top-tier in-house data science talent is crucial.”
With a multi-billion prize at stake, the race is just getting started.
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