After a tumultuous 2022 for technology investment and talent, the first half of 2023 has seen a resurgence of enthusiasm about technology’s potential to catalyze progress in business and society. Generative AI deserves much of the credit for ushering in this revival, but it stands as just one of many advances on the horizon that could drive sustainable, inclusive growth and solve complex global challenges.
To help executives track the latest developments, the McKinsey Technology Council has once again identified and interpreted the most significant technology trends unfolding today. While many trends are in the early stages of adoption and scale, executives can use this research to plan ahead by developing an understanding of potential use cases and pinpointing the critical skills needed as they hire or upskill talent to bring these opportunities to fruition.
Our analysis examines quantitative measures of interest, innovation, and investment to gauge the momentum of each trend. Recognizing the long-term nature and interdependence of these trends, we also delve into underlying technologies, uncertainties, and questions surrounding each trend. This year, we added an important new dimension for analysis—talent. We provide data on talent supply-and-demand dynamics for the roles of most relevance to each trend. (For more, please see the sidebar, “Research methodology.”)
New and notable
All of last year’s 14 trends remain on our list, though some experienced accelerating momentum and investment, while others saw a downshift. One new trend, generative AI, made a loud entrance and has already shown potential for transformative business impact.
This new entrant represents the next frontier of AI. Building upon existing technologies such as applied AI and industrializing machine learning, generative AI has high potential and applicability across most industries. Interest in the topic (as gauged by news and internet searches) increased threefold from 2021 to 2022. As we recently wrote, generative AI and other foundational models change the AI game by taking assistive technology to a new level, reducing application development time, and bringing powerful capabilities to nontechnical users. Generative AI is poised to add as much as $4.4 trillion in economic value from a combination of specific use cases and more diffuse uses—such as assisting with email drafts—that increase productivity. Still, while generative AI can unlock significant value, firms should not underestimate the economic significance and the growth potential that underlying AI technologies and industrializing machine learning can bring to various industries.
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Investment in most tech trends tightened year over year, but the potential for future growth remains high, as further indicated by the recent rebound in tech valuations. Indeed, absolute investments remained strong in 2022, at more than $1 trillion combined, indicating great faith in the value potential of these trends. Trust architectures 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 critical across industries. Investment in other trends—such as applied AI, advanced connectivity, and cloud and edge computing—declined, but that is likely due, at least in part, to their maturity. More mature technologies can be more sensitive to short-term budget dynamics than more nascent technologies with longer investment time horizons, such as climate and mobility technologies. Also, as some technologies become more profitable, they can often scale further with lower marginal investment. Given that these technologies have applications in most industries, we have little doubt that mainstream adoption will continue to grow.
Organizations shouldn’t focus too heavily on the trends that are garnering the most attention. By focusing on only the most hyped trends, they may miss out on the significant value potential of other technologies and hinder the chance for purposeful capability building. Instead, companies seeking longer-term growth should focus on a portfolio-oriented investment across the tech trends most important to their business. Technologies such as cloud and edge computing and the future of bioengineering have shown steady increases in innovation and continue to have expanded use cases across industries. In fact, more than 400 edge use cases across various industries have been identified, and edge computing is projected to win double-digit growth globally over the next five years. Additionally, nascent technologies, such as quantum, continue to evolve and show significant potential for value creation. Our updated analysis for 2023 shows that the four industries likely to see the earliest economic impact from quantum computing—automotive, chemicals, financial services, and life sciences—stand to potentially gain up to $1.3 trillion in value by 2035. By carefully assessing the evolving landscape and considering a balanced approach, businesses can capitalize on both established and emerging technologies to propel innovation and achieve sustainable growth.
Tech talent dynamics
We can’t overstate the importance of talent as a key source in developing a competitive edge. A lack of talent is a top issue constraining growth. There’s a wide gap between the demand for people with the skills needed to capture value from the tech trends and available talent: our survey of 3.5 million job postings in these tech trends found that many of the skills in greatest demand have less than half as many qualified practitioners per posting as the global average. Companies should be on top of the talent market, ready to respond to notable shifts and to deliver a strong value proposition to the technologists they hope to hire and retain. For instance, recent layoffs in the tech sector may present a silver lining for other industries that have struggled to win the attention of attractive candidates and retain senior tech talent. In addition, some of these technologies will accelerate the pace of workforce transformation. 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. And companies should continue to look at how they can adjust roles or upskill individuals to meet their tailored job requirements. Job postings in fields related to tech trends grew at a very healthy 15 percent between 2021 and 2022, even though global job postings overall decreased by 13 percent. Applied AI and next-generation software development together posted nearly one million jobs between 2018 and 2022. Next-generation software development saw the most significant growth in number of jobs (exhibit).
Exhibit
This bright outlook for practitioners in most fields highlights the challenge facing employers who are struggling to find enough talent to keep up with their demands. The shortage of qualified talent has been a persistent limiting factor in the growth of many high-tech fields, including AI, quantum technologies, space technologies, and electrification and renewables. The talent crunch is particularly pronounced for trends such as cloud computing and industrializing machine learning, which are required across most industries. It’s also a major challenge in areas that employ highly specialized professionals, such as the future of mobility and quantum computing (see interactive).
Most fields related to these tech trends require skills where talent supply is low, while only a few fields have a talent surplus.
Availability of qualified talent,1 ratio of talent possessing each trend’s most needed tech skills to all job postings requiring skill
Rank of demandHighLow
Talent deficitfor key skill
Benchmark:2 profiles with skillper job posting2
Talent surplusfor key skill
<0.1:10.1:10.2:10.3:10.5:11:12:13:14:15:16:18:1QuantumtechnologiesGenerative AIFuture of spacetechnologiesFuture ofbioengineeringWeb3Industrializingmachine learningImmersive-realitytechnologiesAdvancedconnectivityClimate tech beyondelectrification & renewablesElectrification andrenewablesFuture ofmobilityTrust architecturesand digital identityCloud andedge computingNext-generationsoftware developmentApplied AI
1Ratio of online profiles claiming a skill to job postings requiring the skill across all industries (logarithmic scale).
2Average talent supply–demand ratio benchmark based on skills listed for the 20 most common jobs.
Source: McKinsey’s proprietary Organizational Data Platform, which draws on licensed, de-identified public professional profile data
The 15 tech trends
This report lays out considerations for all 15 technology trends. We grouped them into five broader categories to make it easier to consider related trends: the AI revolution, building the digital future, compute and connectivity frontiers, cutting-edge engineering, and a sustainable world. Of course, when considering trend combinations, there’s significant power and potential in looking across these groupings.
To describe the state of each trend, we developed scores for innovation (based on patents and research) and interest (based on news and web searches). We also counted investments in relevant technologies and rated their level of adoption by organizations.
0
1
2
3
4
5
250
150
75
Color = adoption rate score
(0 = no adoption;
5 = mainstream adoption)
Size = equity investment, $ billion
The AI revolution
Applied AI
Models trained in machine learning can be used to solve classification, prediction, and control problems to automate activities, add or augment capabilities and offerings, and make better decisions.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$104
billion
equity investment,2022
+6%
job postings
difference,2021–22
Industries affected
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
Pharmaceuticals and medical products
Public and social sectors
Real estate
Retail
Telecommunications
The AI revolution
Industrializing machine learning
A rapidly evolving ecosystem of software and hardware solutions is enabling practices that accelerate and derisk the development, deployment, and maintenance of machine learning solutions.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$3
billion
equity investment,2022
+23%
job postings
difference,2021–22
Industries affected
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
Pharmaceuticals and medical products
Telecommunications
The AI revolution
Generative AI
Generative AI can automate, augment, and accelerate 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.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$5
billion
equity investment,2022
+44%
job postings
difference,2021–22
Industries affected
Consumer packaged goods
Financial services
Healthcare systems and services
Information technology and electronics
Media and entertainment
Oil and gas
Pharmaceuticals and medical products
Retail
Telecommunications
Building the digital future
Next-generation software development
New software tools, including those that enable modern code-deployment pipelines and automated code generation, testing, refactoring, and translation, can improve application quality and development processes.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$2
billion
equity investment,2022
+29%
job postings
difference,2021–22
Industries affected
Financial services
Information technology and electronics
Building the digital future
Trust architectures and digital identity
Digital-trust technologies enable organizations to build, scale, and maintain the trust of stakeholders in the use of their data and digital-enabled products and services.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$47
billion
equity investment,2022
+16%
job postings
difference,2021–22
Industries affected
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
Telecommunications
Building the digital future
Web3
Web3 includes platforms and applications that aim to enable shifts toward a future, decentralized internet with open standards and protocols while protecting digital-ownership rights. It’s not simply cryptocurrency investments, but rather a transformative way to design software for specific purposes. This shift potentially provides users with greater ownership of their data and catalyzes new business models.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$62
billion
equity investment,2022
+40%
job postings
difference,2021–22
Industries affected
Financial services
Information technology and electronics
Media and entertainment
Retail
Compute and connectivity frontiers
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.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$118
billion
equity investment,2022
+7%
job postings
difference,2021–22
Industries affected
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
Telecommunications
Compute and connectivity frontiers
Immersive-reality technologies
Immersive-reality technologies use sensing technologies and spatial computing to help users “see the world differently” through mixed or augmented reality or “see a different world” through virtual reality.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$16
billion
equity investment,2022
+10%
job postings
difference,2021–22
Industries affected
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
Retail
Compute and connectivity frontiers
Cloud and edge computing
In cloud and edge computing, workloads are distributed across locations, such as hyperscale remote data centers, regional centers, and local nodes, to improve latency, data-transfer costs, adherence to data sovereignty regulations, autonomy over data, and security.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$84
billion
equity investment,2022
+12%
job postings
difference,2021–22
Industries affected
Aerospace and defense
Automotive and assembly
Aviation, travel, and logistics
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
Telecommunications
Compute and connectivity frontiers
Quantum technologies
Quantum-based technologies could provide an exponential increase in computational performance for certain problems and transform communication networks by making them more secure.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$2
billion
equity investment,2022
+12%
job postings
difference,2021–22
Industries affected
Aerospace and defense
Automotive and assembly
Aviation, travel, and logistics
Chemicals
Financial services
Information technology and electronics
Metals and mining
Oil and gas
Pharmaceuticals and medical products
Cutting-edge engineering
Future of mobility
Mobility technologies aim to improve the efficiency and sustainability of land and air transportation of people and goods using autonomous, connected, electric, and shared solutions.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$194
billion
equity investment,2022
+15%
job postings
difference,2021–22
Industries affected
Automotive and assembly
Aviation, travel, and logistics
Electric power, natural gas, and utilities
Financial services
Oil and gas
Public and social sectors
Retail
Cutting-edge engineering
Future of bioengineering
Converging biological and information technologies improve health and human performance, transform food value chains, and create innovative products and services.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$43
billion
equity investment,2022
–19%
job postings
difference,2021–22
Industries affected
Agriculture
Chemicals
Consumer packaged goods
Healthcare systems and services
Pharmaceuticals and medical products
Cutting-edge engineering
Future of space technologies
Advances and cost reductions across satellites, launchers, and habitation technologies are enabling innovative space operations and services.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$8
billion
equity investment,2022
+16%
job postings
difference,2021–22
Industries affected
Aerospace and defense
Telecommunications
A sustainable world
Electrification and renewables
Electrification and renewables help drive toward net-zero commitments and include solar-, wind-, and hydro-powered renewables and other renewables; nuclear energy; hydrogen; sustainable fuels; and electric-vehicle charging.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$288
billion
equity investment,12022
+27%
job postings
difference,2021–22
1Capital expenditure related investments for 2022 totaled $578 billion in the Global Energy Perspective 2022 report.
Industries affected
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
Real estate
A sustainable world
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.
0
1
2
3
4
5
adoption rate score, 2022
(0 = none; 5 = mainstream)
$86
billion
equity investment,12022
+8%
job postings
difference,2021–22
1Capital expenditure related investments for 2022 totaled $98 billion in the Global Energy Perspective 2022 report.
Industries affected
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
Real estate
The AI revolution group
The AI revolution group
The AI revolution group
Building the digital future group
Building the digital future group
Building the digital future group
Compute and connectivity frontiers group
Compute and connectivity frontiers group
Compute and connectivity frontiers group
Compute and connectivity frontiers group
Cutting-edge engineering group
Cutting-edge engineering group
Cutting-edge engineering group
A sustainable future group
A sustainable future group
00.20.40.60.81.0Interest, score (0 = lower; 1 = higher)00.20.40.60.81.0 Innovation, score (0 = lower; 1 = higher)201820182018201820182018201820182018201820182018201820182018202220222022202220222022202220222022202220222022202220222022Applied AIIndustrializing machine learningGenerative AINext-generation software developmentTrust architectures and digital identityWeb3Advanced connectivityImmersive-reality technologiesCloud and edge computingQuantum technologiesFuture of mobilityFuture of bioengineeringFuture of space technologiesElectrificationand renewablesClimate tech beyondelectrification and renewables
Trends
Applied AI
1
Industrializing machine learning
2
Generative AI
3
Next-generation software development
4
Trust architectures and digital identity
5
Web3
6
Advanced connectivity
7
Immersive-reality technologies
8
Cloud and edge computing
9
Quantum technologies
10
Future of mobility
11
Future of bioengineering
12
Future of space technologies
13
Electrification and renewables
14
Climate tech beyond
electrification and renewables
15
About the author(s)
Michael Chui is a McKinsey Global Institute partner in McKinsey’s Bay Area office, where Mena Issler is an associate partner, Roger Roberts is a partner, and Lareina Yee is a senior partner.
The authors wish to thank the following McKinsey colleagues for their contributions to this research: Bharat Bahl, Soumya Banerjee, Arjita Bhan, Tanmay Bhatnagar, Jim Boehm, Andreas Breiter, Tom Brennan, Ryan Brukardt, Kevin Buehler, Zina Cole, Santiago Comella-Dorda, Brian Constantine, Daniela Cuneo, Wendy Cyffka, Chris Daehnick, Ian De Bode, Andrea Del Miglio, Jonathan DePrizio, Ivan Dyakonov, Torgyn Erland, Robin Giesbrecht, Carlo Giovine, Liz Grennan, Ferry Grijpink, Harsh Gupta, Martin Harrysson, David Harvey, Kersten Heineke, Matt Higginson, Alharith Hussin, Tore Johnston, Philipp Kampshoff, Hamza Khan, Nayur Khan, Naomi Kim, Jesse Klempner, Kelly Kochanski, Matej Macak, Stephanie Madner, Aishwarya Mohapatra, Timo Möller, Matt Mrozek, Evan Nazareth, Peter Noteboom, Anna Orthofer, Katherine Ottenbreit, Eric Parsonnet, Mark Patel, Bruce Philp, Fabian Queder, Robin Riedel, Tanya Rodchenko, Lucy Shenton, Henning Soller, Naveen Srikakulam, Shivam Srivastava, Bhargs Srivathsan, Erika Stanzl, Brooke Stokes, Malin Strandell-Jansson, Daniel Wallance, Allen Weinberg, Olivia White, Martin Wrulich, Perez Yeptho, Matija Zesko, Felix Ziegler, and Delphine Zurkiya.
They also wish to thank the external members of the McKinsey Technology Council.
This interactive was designed, developed, and edited by McKinsey Global Publishing’s Nayomi Chibana, Victor Cuevas, Richard Johnson, Stephanie Jones, Stephen Landau, LaShon Malone, Kanika Punwani, Katie Shearer, Rick Tetzeli, Sneha Vats, and Jessica Wang.