After a hectic 2022 For technology investment and talent, the first half of 2023 saw renewed excitement about technology’s ability to drive progress in industry and society. Generative AI deserves much of the credit for leading this renaissance, but it is just one of many advances that can drive sustainable, inclusive growth and solve complex global challenges.
To help executives keep track of the latest developments, the McKinsey Technology Council has once again identified and explained the most important technology trends emerging today. While many trends are in the early stages of adoption and scale, managers can use this research to develop an understanding of potential use cases and pinpoint critical skills needed when hiring or developing talent to capitalize on these opportunities.
To measure the momentum of each trend, our analysis examines quantitative measures of interest, innovation and investment. Recognizing the long-term nature and interdependence of these trends, we also examine the underlying technologies, uncertainties, and questions surrounding each trend. This year, we’ve added an important new dimension to analytics – talent. We provide data on talent supply and demand dynamics for the most relevant roles for each trend. (Also, see “Research Methodology,” in the sidebar.)
New and remarkable
All 14 trends from the past year are on our list, although some have accelerated momentum and investment, while others have seen declines. A new trend, generative AI, has made a loud entry and has already shown potential for transformative business impact.
This new entry represents the next frontier of AI. Building on existing technologies such as applied AI and industrialized machine learning, generative AI has greater potential and applicability in most industries. From 2021 to 2022, interest in the topic (based on news and internet searches) tripled. As we recently wrote, Generative AI and other fundamental models are changing the AI game, taking assistive technology to a new level, reducing app development time and bringing powerful capabilities to non-technical users. Generative AI is poised to add $4.4 trillion in economic value from a combination of specific use cases and more widespread applications, such as helping with productivity-boosting email drafts. However, while generative AI can unlock significant value, companies should not underestimate the economic importance and growth potential that underlying AI technologies and industrialization machine learning can bring to various industries.
Investment in most technology trends is tightening year-on-year, but the potential for future growth remains high, and recent technology valuations point to a rebound. In fact, absolute investments remained strong in 2022, exceeding $1 trillion, indicating great confidence in the value potential of these trends. Trust structures and digital identity grew the most out of last year’s 14 trends, increasing by nearly 50 percent as security, privacy and resilience become increasingly important across industries. Investment in applied AI, advanced connectivity and other trends such as cloud and edge computing declined, but that can at least be attributed to their maturity. More mature technologies tend to be more sensitive to short-term budget dynamics than newer technologies with longer investment time horizons, such as climate and mobility technologies. Also, because some technologies are highly profitable, they can often scale further with lower marginal investment. We have no doubt that mainstream adoption will continue to grow as these technologies have applications across most industries.
Companies should not focus too much on trends that attract more attention. By focusing only on the hottest trends, they may miss the significant value potential of other technologies and block the opportunity to build purposeful capability. Instead, companies seeking long-term growth should focus on portfolio-oriented investing across the technology trends most important to their business. Technologies such as cloud and edge computing and the future of bioengineering show a steady increase in innovation and continue to expand use cases across industries. In fact, more than 400 edge use cases have been identified across various industries, and edge computing is predicted to experience double-digit growth globally over the next five years. Additionally, new technologies such as quantum continue to evolve and show significant potential for value creation. Our updated analysis for 2023 shows that the four industries most likely to see an early economic impact from quantum computing—automotive, chemicals, financial services, and life sciences—could be worth up to $1.3 trillion by 2035. By taking a landscape and balanced approach by carefully assessing growth, businesses can leverage established and emerging technologies to drive innovation and achieve sustainable growth.
Technical talent dynamics
We cannot overstate the importance of talent in building competitiveness. Lack of talent is a major issue hindering growth. There’s a wide gap between technology trends and the demand for people with the skills needed to capture the value of available talent: Our survey of 3.5 million job openings in these technology trends found that many of the skills in high demand are less than half the number. Practitioners eligible for a post on global average. Organizations must stay on top of the talent market, be ready to respond to significant changes and deliver strong value to the technologists they want to hire and retain. For example, recent layoffs in the tech industry may offer a silver lining to other industries that have struggled to attract attractive candidates and retain senior tech talent. Additionally, some of these technologies will accelerate the pace of workforce change. In the coming decade, 20 to 30 percent of the time workers spend at work could be replaced by automation technologies, leading to significant changes in the skills needed to succeed. And organizations need to look at how they can adjust roles or develop individuals to meet their appropriate job needs. Between 2021 and 2022, job openings in fields related to technology trends grew by a very healthy 15 percent, although global job postings declined by 13 percent overall. Between 2018 and 2022, applied AI and next-generation software development have combined to register nearly one million jobs. Next-generation software development saw the most significant growth in the number of jobs (Exhibit).
Picture explanation:
Small multiples of 15 gradient charts show the number of job postings in various fields related to technology trends from 2021 to 2022. Cumulative growth across all sectors is around 400,000 jobs, with AI gaining the most job postings in 2022 and 6% experience. Increase from 2021. Next-generation software development had the second highest number of job postings in 2022 and saw 29% growth from 2021. Other categories with most job postings showing up to at least 2022 include: Cloud and Edge Computing, Trust Architecture and Digital Identity, Future Mobility, Electrification and Renewables, Climate Technology Beyond Electrification and Renewables, Advanced Connectivity, Augmented-Reality Technologies, Industrialization Machine Learning, Web3 , the future of bioengineering, the future of aerospace technologies, generative AI, and technologies.
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This bright outlook for trainees across most sectors highlights the challenge employers face as they struggle to find enough talent to meet their demands. A shortage of qualified talent continues to be a limiting factor in the growth of many high-tech sectors, including AI, quantum technologies, space technologies, and electrification and renewables. The talent crunch is especially pronounced thanks to trends like cloud computing and industrializing machine learning, which are needed in most industries. This is a major challenge in areas that employ highly skilled professionals, such as future mobility and quantum computing (see interactive).