Generative AI upcoming impact on the software industry
Generative AI upcoming impact on the software industry
Insightful data from McKinsey point to generative AI driving a disruption in the software industry.
The firm estimates spending on generative AI technology to reach $175-250B by 2027. It projects a 2-6 percentage point lift in growth for the sector. However, the remainder of the growth will be funded by reallocating IT budgets. I am already hearing numerous accounts of budgets being revisited or put on hold to fund AI projects.
McKinsey expects an acceleration of vendor switching, from 10% of the software budget to 15-20%. Furthermore, it anticipates a 1-3 percentage point increase in churn, pointing to a shift toward building in-house solutions and some categories getting commoditized.
Unsurprisingly, customer care use cases are among the most actively pursued.
The company ultimately broke down the projected generative AI spending by solution archetype, suggesting internal solutions could account for 20-35% of the overall expenditure.
