Cognizant Predicts GenAI Will Inject $1 Trillion Into the U.S. Economy
We know that GenAI has great potential to transform businesses and the economy. However, we don’t know how much impact it will have. Would the hype fizzle away in a few years or would have a most lasting impression?
Cognizant, a provider of information technology (IT), consulting, and business process outsourcing (BPO) services, predicts GenAI will add $1.043 trillion in annual value to the U.S. GDP by 2023. To provide some perspective, this amount is more than the entire U.S. construction industry.
The research by Cognizant was in partnership with Oxford Economics, a leader in global economic forecasting and econometric analysis. The objective of the study was to analyze the economic impact of GenAI on the U.S. economy for 10 years. The study was based on assumed inputs for Oxford’s Global Economic Model (GEM) on how GenAI is expected to be implemented by U.S. businesses.
The findings reveal that 90 percent of jobs will be disrupted in some way by GenAI. This sets the stage for a major shift in our approach to productivity and economic growth. The impact will be greatly influenced by the rate of GenAI adoption. The report reminds us that while microprocessors arrived in the early 1970s, it took two decades for the PCs to be widely adopted and for businesses to realize the productivity gained from the new technology.
The $1 trillion prediction is based on high-end numbers of GenAI adoption. Using more conservation assumptions, the impact could be significantly less at $477 billion.
A key factor that could influence GenAI's growth is disruption to the job market. The more disruption workers face, the more challenging it will be to adapt to new ways of working. The report analyzed over 1000 professionals to determine the “exposure score”. Jobs such as HVAC maintenance would be least impacted with a score of 5 percent. On the other hand, jobs related to computer science will be most impacted with 62 percent.
Interestingly, in the past innovations and technological advances impacted manual labor and process-centric knowledge work. However, with the rise of GenAI, it is completely different. The most impacted jobs are what we consider as knowledge work. Even CEOs have an exposure score of 25 percent indicating that their role is also likely to be impacted by GenAI.
The exposure score is set to change depending on how the market responds to the evolving technology. The report predicts that job impact will grow over time. The impact of GenAI will have a dramatic spike before it plateaus as the technology becomes more pervasive.
To better understand how challenging it would be for displaced workers to find new employment, Cognizant calculated a “friction score” for various professions. A high friction score for a profession means it is more challenging to find new work. Combining the friction score with the exposure score, Cognizant determined the “predicted exposure score” to gain a more in-depth understanding of the impact of GenAI on the workforce. The results show that professions such as software developers and database admissions may have a less complicated transition to new work, likely due to their transferable skill sets.
Roles related to office and administrative roles may find it more challenging to find new work. One of the industries that will clearly benefit from GenAI is healthcare, as it already faces a massive shortage of skilled workforce.
Cognization recommends reskilling the workforce as AI advances. Leaders across industries must act now to start building trust with their workforce. It is imperative the workers know what's coming and they are prepared for it. Organizations must initiate reskilling programs to better equip their workers for the expanding digital economy. The inevitable disruption by GenAI doesn’t have to be feared. Instead, if organizations collaborate with their workforce and build trust and transparency, then GenAI could have benefits for all.
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