← External Forces: Digital & Technology (all topics)
Generative AI adoption
What it is
Large language and generative models performing work previously done by people - drafting, coding, summarising, answering queries, generating images and audio. Unlike earlier automation it targets cognitive and creative work rather than physical or rule-based tasks
The commercial question is who captures the productivity gain: the provider, the client, or neither because it is competed away
Impact on industries
- Attacks effort-based pricing directly - if fewer people deliver the same outcome, billing by headcount or transaction shrinks even as capability rises
- Clients expect the gain passed back as lower prices, so deflation arrives before the offsetting demand does
- Creates genuinely new demand for data centres, power, networking and the services to deploy models, which is additive rather than substitutional
- Outcome-based contracting decouples revenue from headcount and is the pricing model that survives the transition