The Power of 12

MGI assessed more than 100 technologies that are advancing rapidly around the world and identified twelve that are likely to have the most impact on addressing India’s challenge

Despite India’s qunatum leap in IT and outsourcing, if we look at the new tech adoption within the country, it’s still at a nascent stage. However, the outlook for new tech adoption looks bright, at least going by a new research by the McKinsey Global Institute (MGI) that analyzed 12 technologies, ranging from mobile Internet to cloud computing to advanced genomics that could have a profound impact on growth and social progress and add in excess of $550 bn by 2025.

MGI assessed more than 100 technologies that are advancing rapidly around the world and identified 12 that are likely to have the most impact on addressing India’s challenges. The new report, ‘India’s Technology Opportunity: Transforming Work, Empowering People’ groups the 12 technologies into three areas:

   Technologies that digitize life and work: the mobile Internet, the cloud, the automation of knowledge work, digital payments, and verifiable digital identity.

    Smart physical systems: the Internet of Things, intelligent transportation and distribution systems, advanced geographic information systems (GIS), and next- generation genomics.

   Technologies for rethinking energy: unconventional oil and gas (horizontal drilling and hydraulic fracturing), renewable energy, and advanced energy storage.

Used together, these technologies could account for 20-30% of India’s GDP growth between 2012 and 2025 and help millions achieve a better quality of life, according to the report. “The spread of digital technologies, as well as advances in energy and genomics, can be one of the most dominant drivers of productivity in India, redefine how basic services are delivered, and contribute to higher living standards for millions of Indians by raising education levels and improving healthcare outcomes,” says Noshir Kaka, managing director of McKinsey & Company in India.

To assess the potential impact of the 12 technologies on the economy of India and the lives of its people, MGI sized more than 40 applications in six sectors of the economy: financial services, education and skills, healthcare, agriculture and food, energy, and infrastructure. It also examined the role of technology in improving delivery of the government services. Often, these technologies will be used in combination, generating a greater impact than any one of them when used alone. For example, Internet of Things sensors in medical devices can be combined with the mobile Internet and intelligent systems (the automation of knowledge work) hosted on the cloud to monitor patients with chronic disease remotely and to alert medical workers automatically when the system detects a potentially dangerous situation.

The total impact of the sized applications could amount to $240 bn to $500 bn a year by 2025. Given the contributions of these sectors to India’s GDP, MGI estimates that across the entire economy the 12 technologies could have a combined economic impact of $550 bn to $1 tn by 2025. “The combined economic impact of the 12 technologies in 2025 could be up to six times the current economic value of the Indian IT industry. They can contribute as high a share of the national economy as the entire manufacturing sector does today,” says Anu Madgavkar, a senior fellow at the McKinsey Global Institute based in Mumbai Applications include:

   Financial Services: Disruptive technologies offer an opportunity to address persistent challenges such as lack of financial inclusion; just 36% of Indians have a bank account. Technology applications such as mobile payments can help as many as 300 mn Indians gain access to banking services and could raise their incomes by 5-30% due to better access to credit and the ability to save and make remittances. The sized applications could translate into economic value of $32 bn to $140 bn per year in 2025.

   Education and Skills: Technology can transform education. School performance can be improved through e-administration, digital identity-based attendance systems, and online teacher certification and training. Blended learning with MOOCs (massive open online courses) can bring high-quality courses to students, and learning simulations can boost hands-on training in nursing and other disciplines. MGI estimates an economic impact of $60 bn to $90 bn per year by 2025 from the higher productivity of more highly educated workers. India could have about 24 mn more high school and college-educated workers and 18 mn to 33 mn more vocationally trained workers by 2025 due to use of digital technologies in the education sector.

   Healthcare: Disruptive technologies could transform delivery of public health services by 2025, extending care through remote health services, delivering expert consultations via the mobile Internet and using tablets and other digital tools to enable healthcare workers with modest skills to carry out basic protocols, and low-cost diagnostic devices. Using Internet of Things tracking systems to curb counterfeit drugs could be worth as much as $15 bn per year. The total value of empowering technologies in healthcare could be $25 bn to $65 bn per year in 2025. Of this, the largest share ($15 bn to $30 bn) could come from equipping healthcare centers and health workers to bring services to some 400 mn of India’s poor.