2 August 2023

McKinsey's technology trends for 2023


NEW DELHI: Lately, in 2023, there has been a resurgence of enthusiasm in people around the development of technology and its potential to uplift businesses and catalyze processes. In this process, generative AI is occupying center stage currently and is primarily responsible for this technological renaissance. This can further develop sustainable and inclusive growth which can then solve global complex challenges.

Amongst the new and notable trends, Generative AI is a trend that has made a loud entrance and has already proven how transformative it can be for businesses. It represents the frontier of AI and builds upon technologies such as applied AI and machine learning. According to McKinsey Technology Council, “Generative AI is poised to add as much as $4.4 trillion in economic value.” The report also mentions that trust architectures and digital identity grew the most out of last year’s 14 trends, increasing by nearly 50 percent. Investments in other trends such as applied AI, advanced connectivity, and cloud and edge have declined. Since these technologies have applications in most industries their mainstream adoption will continue to grow.

Register NowAccording to the report, cloud and edge computing are the future of bioengineering and have shown steady increases and have expanded use cases across industries. Currently, edge computing has over 500 use cases across industries and is expected to show further growth. Quantum technology is also growing but it is a nascent technology. The four industries that will see the earliest impacts of quantum computing as per the report are automotive, chemicals, financial services, and life sciences. These industries can stand to see a growth of $1.3 trillion by 2035 by strategically investing in quantum computing as per the report.

Over the years the talent dynamics in tech have changed considerably. There is a gap between available talent and the demand for talent with a particular skill set. According to a survey conducted by McKinsey, 3.5 million job postings in these tech trends of the skills in greatest demand have less than half as many qualified practitioners, for each posting as the global average. According to the report, “In the coming decade, 20 to 30 percent of the time that workers spend on the job could be transformed by automation technologies, leading to significant shifts in the skills required to be successful.” Job postings in fields related to tech trends grew 15% between 2021 and 2022 even though overall global postings decreased by 13%. Applied AI and next-gen software development collectively posted over one million jobs between 2018 and 2022.

The silver lining, however, for practitioners is that employers are still facing challenges to find enough talent to keep up with their demands. There is a shortage of qualified professionals in fields such as AI, quantum technologies, space technologies, and electrification and renewables. Further, the talent crunch is particularly, pronounced for cloud computing and industrialized machine learning.

These are the 15 tech trends as identified by the McKinsey Technology Council for 2023:

Applied AI: Models trained in machine learning can solve classification, prediction, and control problems and automate activities, add or augment capabilities and offerings, and make better decisions. Applied AI has proven useful for several non-tech users and will continue to do so. The report suggests that there has been an increase of 6% in job postings in the field of applied AI from 2021 to 2022. There has also been an equity investment of $104 billion and the industries that are affected by this are aerospace and defense, agriculture, automotive and assembly, aviation, travel and logistics, chemicals, construction and building materials, consumer packaged goods, education, electric power, natural gas and utilities, financial services, healthcare systems, and services, information technology and electronics, media and entertainment, metals and mining, oil and gas, pharmaceutical and medical products, public and social sectors, real estate, retail, and telecommunications. The adoption rate of this trend has been rated a 4 out of 5.

Industrializing machine learning: An ecosystem of software and hardware solutions has enabled practices that accelerate and derisk the development, deployment, and maintenance of machine learning solutions. This is primarily used for performance monitoring, stability, and ongoing improvements. There has been an increase of 23% in job postings in this field from 2021 to 2022. Further, there has also been a $3 billion equity investment. The industries that are affected by this trend are aerospace and defense, automotive and assembly, electric power, natural gas and utilities, financial services, information technology and electronics, media and entertainment, metals and mining, oil and gas, pharmaceutical and medical products, and telecommunications .T he adoption rate of this trend has been rated a 2 out of 5.

Generative AI: Generative AI is used for automating, augmenting, and accelerating work by tapping into unstructured mixed-modality data sets to enable the creation of new content in various forms, such as text, video, code, and even protein sequences. There has been a 44% increase in job postings in the field between 2021 to 2022. There has also been a $5 billion equity investment in generative AI and the industries affected by this trend are consumer packaged goods, financial services, healthcare systems and services, information technology and electronics, media and entertainment, oil and gas, pharmaceutical and medical products, retail and telecommunications. The adoption rate of this trend has been rated a 1 out of 5.

Next-generation software development: New software tools that enable modern code-deployment pipelines and automated code generation, testing, refactoring, and translation, can improve application quality and development processes. There has been a 25% increase in job postings in this field between 2021 to 2022. There has also been a $2 billion equity investment in this field and the industries affected by this trend are financial services and information technology. The adoption rate of this trend is rated a 2 out of 5.

Trust architectures and digital identity: Organizations can build, scale, and maintain the trust of stakeholders in the use of their data and digital-enabled products and services because of digital trust technologies. This allows users to exchange information and data through trusted service systems. There has been a 16% increase in job postings in this field between 2021 and 2022 and there has also been a $47 billion equity investment. The industries that are affected by this trend are aerospace and defense, consumer packaged goods, education, financial services, healthcare systems, and services, information technology and electronics, media and entertainment, pharmaceutical and medical products, public and social sectors, retail and telecommunications. The adoption rate of this trend is rated a 2 out of 5.

Web3: Web3 includes platforms and applications that enable shifts toward a future, decentralized internet with open standards and protocols while protecting digital-ownership rights. It’s not just cryptocurrency investments. It’s a transformative way to design software for specific purposes. This gives users greater ownership of their data and inspires new business models. The third generation of the web is a network of meaningfully linked data that is meant to be decentralized. There has been a 40% increase in job postings in this field and a $62 billion equity investment. The industries that are affected by this trend are financial services, information technology and electronics, media and entertainment, and retail. The adoption rate for this trend is rated 1 out of 5.

Advanced connectivity: Wireless low-power networks, 5G/6G cellular, Wi-Fi 6 and 7, low-Earth-orbit satellites, and other technologies support a host of digital solutions that can drive growth and productivity across industries today and tomorrow. There has been a 7% increase in job postings in this field and a 118 trillion dollar equity investment in this trend. The industries that are affected by this trend are aerospace and defense, automotive and assembly, aviation, travel and logistics, construction and building materials, electric power, natural gas, and utilities, healthcare systems and services, information technology and electronics, media and entertainment, metals and mining, oil and gas, retail and telecommunications. The adoption rate of this trend is rated at a 4 out of 5.

Immersive reality technologies: Sensing technologies and spatial computing are used to help users “see the world differently” through mixed or augmented reality or “see a different world” through virtual reality as part of immersive-reality technologies. This technology stimulates reality and creates a distinct experience for the users. There has been a 10% increase in job postings and a $16 billion equity investment in the field. This trend will affect industries like aerospace and defense, automotive and assembly, aviation, travel and logistics, construction and building materials, consumer packaged goods, education, electric power, natural gas and utilities, healthcare systems and services, information technology and electronics, media and entertainment, real estate and retail. The adoption rate for this trend is rated 1 out of 5.

Cloud and edge computing: Cloud and edge computing allow users to distribute workloads across locations, such as hyper-scale remote data centers, regional centers, and local nodes, to improve latency, data-transfer costs, adherence to data sovereignty regulations, autonomy over data, and security. There has been a 12% increase in job postings in this field between 2021 and 2022 and a $84 billion equity investment. The industries that are affected by this are aerospace and defense, automotive and assembly, chemicals, electric power, natural gas and utilities, financial services, healthcare systems, and services, information technology and electronics, manufacturing, media and entertainment, pharmaceuticals and medical products, retail, and telecommunications. The adoption rate of this trend is rated at a 4 out of 5.

Quantum technologies: Quantum technologies provide a springboard in computational performance for certain problems and transform communication networks by making them more secure. There has been an increase in job postings in this field by 12% between 2021 to 2022 and a $2 billion equity investment has also been made towards this up until 2022. The industries that are affected by this trend are aerospace and defense, automotive and assembly, chemicals, financial services, information technology and electronics, metals and mining, oils and gas, and pharmaceuticals and medical products. The adoption rate of this trend is rated at 0 out of 5.

Future of mobility: Mobility aims to improve the efficiency and sustainability of land and air transportation of people and goods using autonomous, connected, electric, and shared solutions. There has been a 15% increase in job postings in this field between 2021 to 2022 and there has also been a $194 billion equity investment. The industries affected by this trend are automotive and assembly, aviation, travel and logistics, electric power, natural gas and utilities, financial services, oil and gas, public and social sectors, and retail. The adoption of this trend is rated at a 2 out of 5.

Future of bioengineering: Converging biological and information technologies to improve health and human performance, transform food value chains, and create innovative products and services. There has been a 19% decline in job postings in this field and a $43 billion equity investment as well. The industries that are affected by this trend are agriculture, chemicals, consumer packaged goods, healthcare systems and services, and pharmaceuticals and medical products. The adoption rate for this trend is rated a 3 out of 5.

Future of space technologies: Advances and cost reductions across satellites, launchers, and habitation technologies enable innovative space operations and services. There has been a 16% increase in job postings in this field from 2021 to 2022 and a $6 billion equity investment in this trend. The industries affected by it are aerospace and defense and telecommunications. The adoption rate of this trend is rated at 2 out of 5.

Electrification and renewables: Electrification and renewable energy drive towards net-zero commitments. These include solar-, wind-, and hydro-powered renewables and other renewables; nuclear energy; hydrogen; sustainable fuels; and electric-vehicle charging. There has been a 27% increase in job postings in this field from 2021 to 2022 and there has also been an equity investment of $288 billion in this trend. The industries affected by this trend are agriculture, automotive and assembly, aviation, travel and logistics, chemicals, construction and building materials, electric power, natural gas and utilities, metals and mining, oil and gas, and real estate.

Climate technologies beyond electrification and renewables: Climate technologies include carbon capture, utilization, and storage (CCUS); carbon removals; natural climate solutions; circular technologies; alternative proteins and agriculture; water and biodiversity solutions and adaptation; and technologies to track net-zero progress. There has been an 8% increase in job postings in this field from 2021 to 2022 and a $86 billion equity investment in this field up until 2022. The industries affected by this trend are agriculture, automotive and assembly, aviation, travel and logistics, chemicals, construction and building materials, electric power, natural gas and utilities, metals and mining, oil and gas, and real estate.

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