Advertisment

AI Impact: Over 40% of Labor Force Could Be Affected in Next Three Years, Says Morgan Stanley

author-image
Emmanuel Abara Benson
Updated On
New Update

AI Set to Transform Labor Market

Advertisment

Morgan Stanley’s recent forecast suggests a significant change in the labor market due to the increasing impact of Artificial Intelligence (AI). Analyst Brian Nowak anticipates that AI will affect about 44% of the labor force in the next few years. The economic impact is estimated at 4.1 trillion dollars, changing input costs, automating tasks, and altering how companies process and analyze information. Currently, AI's impact is estimated at 2.1 trillion dollars, affecting 25% of labor.

"We see generative AI expanding the scope of business processes that can be automated," Nowak wrote in a Sunday note. "The input costs supporting GenAI functionality are rapidly falling, enabling a strongly expansionary impact to software production."

AI Adoption Poses Major Opportunities for Software Vendors

Advertisment

With the increasing integration of AI in various sectors, software vendors are expected to benefit significantly. Morgan Stanley forecasts that these vendors could capture 5% of the 4.1 trillion-dollar labor impact or a total addressable market of 205 billion dollars over the next three years. Moreover, if generative AI adoption among enterprise workloads reaches 20% over the next three years, it could pose a 150 billion-dollar global enterprise spending opportunity.

"AI capabilities, software take rates, and enterprise adoption are the key variables that impact our spending forecast," Nowak said.

Generative AI: A Game-Changer for Business Processes and Workforce

Advertisment

Generative AI, exemplified by models like ChatGPT, is set to transform the way people work and access information. It will inevitably lead to changes in job roles and tasks, with some jobs being automated or augmented, while others will remain unaffected. This does not necessarily mean that 40% of jobs will be eliminated. On the contrary, it will result in new tasks for humans to perform, such as ensuring the accurate and responsible use of new AI-powered systems.

Take customer service, for instance. The ability of generative AI to understand a customer's intent and provide massive amounts of information at the agent's fingertips greatly increases their capacity to resolve customer problems more quickly and thoroughly.

Preparing for an AI-Driven Economy

As generative AI continues to evolve and permeate various industries, companies and workers need to adapt and upskill to stay competitive. Companies must consider several options, from using AI applications like ChatGPT and DALL-E to customizing models with their own data to increase accuracy and usefulness. It is equally critical to ensure the responsible use of generative AI and that models do not create unacceptable risk for people and businesses.

Moreover, policymakers and businesses need to collaborate to create a governance approach that is inclusive, safe, and ethical, while also enabling progress and promoting experimentation. This will build an essential foundation for trust across society while unlocking new sources of growth.

Advertisment
Advertisment