Digital technologies could unlock US $20 trillion for financial services, retail, healthcare, manufacturing and life sciences industries by 2018

Cognizant just unveiled the results of its Work Ahead Study on the current and future state of the digital economy globally and in APAC. The research has been conducted in collaboration with renowned economist, Nouriel Roubini, and 50 leading futurists to assess the responses of 2,000 executives and 150 MBA students around the world. 

The study highlights how digital technologies will transform the way we work, and the financial penalties of not effectively tapping into these opportunities.

The expanding value of digital

Major shifts resulting from the impact of digital technologies, as identified in the study, include: 

Respondents estimated digital transformation impact to more than double in the next three years. While an estimated 6% of revenue was driven by digital technologies in 2015, by 2018, this is expected to reach 14%, representing a value of about $770 billion per year for the 2,000 companies surveyed – a total economic impact of $2.3 trillion. 

For businesses, digital will increase revenues on average by over 10%. This rate will reach 12.9% in the retail industry by 2018, in comparison to 7% today. 

In APAC, respondents expect digital to deliver US$142 billion in net revenue per year by 2018, a total economic impact of $425 billion across all companies studied in the region.

Over 98% of leaders globally see Artificial Intelligence and analytics as the most impactful game-changers by 2018.

By 2025, the impact of analytics will grow by 34.7%, sensors/IoT by 41.5%, virtual reality by 21%, cybersecurity by 32.3% and blockchain by 26.8%.

Respondents expect a return on investment in digital technologies to average 86.1% between 2015 and 2018.

Retail is the most likely sector to invest in digital innovation, and expects a 119% ROI.

Between 2015 and 2018 alone, the impact of digital transformation in the retail, banking, insurance, manufacturing, healthcare and life sciences industries, which today generate over $60 trillion in revenue or 40% of world’s GDP, could be up to $20 trillion.

Over 98% of leaders globally see Artificial Intelligence and analytics as the most impactful game-changers by 2018.

By 2025, the impact of analytics will grow by 34.7%, sensors/IoT by 41.5%, virtual reality by 21%, cybersecurity by 32.3% and blockchain by 26.8%.

Respondents expect a return on investment in digital technologies to average 86.1% between 2015 and 2018.

Retail is the most likely sector to invest in digital innovation, and expects a 119% ROI.

Between 2015 and 2018 alone, the impact of digital transformation in the retail, banking, insurance, manufacturing, healthcare and life sciences industries, which today generate over $60 trillion in revenue or 40% of world’s GDP, could be up to $20 trillion.

Beware of ‘The Laggard Penalty’

Cognizant’s study found that a ‘wait and see’ approach with digital technologies will have a detrimental financial impact in the coming years. Cognizant calls this ‘The Laggard Penalty’ - the difference in both cost and revenue performance due to a lack of technology adoption.

In the financial services industry, for instance, digital laggards were found to have an average total economic impact of about 3.1% of all costs and revenue. In comparison, organisations already in the digital transformation race have an impact of about 7.4%. This means digital organisations have a 139% advantage over laggards when it comes to digital.

In the last financial year, the Laggard Penalty reached $262.5 billion across the 2,000 companies surveyed. By 2018, it will add up to a massive $1,315.6 billion. This is $692 million between 2015 and 2018 for each company.

Manish Bahl, Senior Director, Centre for the Future of Work at Cognizant, said, “The impact of new technologies on all aspects of business – what we’re now calling “digital” – is so large that there is no way for any of us to escape its gravitational pull. Even if you are one of the few who think this is all still hype, if you’re set on denying the real value of code, your defensive barricade will not hold for much longer.”

“No company will be able to escape from the impact of new technologies on work and business. The impact will change not only business, but also education and government, and it will also redefine what it means to be a healthy society”, he added.

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For more details about the impact of digital technologies in APAC, you can download the following report: The Work Ahead: the future of businesses and jobs in Asia Pacific’s digital economy.