5 minute read 12 Apr 2022
Technology trends in business

How can corporations reinvent themselves when technology trends are reshaping businesses?

Authors
Ravi Mahajan

EY India Technology, Media & Telecom Partner

Experienced tax professional advising domestic and multinational companies in areas of tax planning, compliance, treaty interpretation, transfer pricing, tax controversy and resolutions.

Mahesh Makhija

EY India Technology Consulting Leader

Technology evangelist, a facilitator of customer centricity and innovation

5 minute read 12 Apr 2022
Related topics Tax Technology Digital Blockchain

Web 3.0 is likely to shift power from technology giants to the hands of the masses.

In brief

  • We are at the cusp of third generation of the internet, also known as Web 3.0.
  • It is likely to bring in a democratized digital world.

The internet is a ubiquitous part of our lives as consumers and entrepreneurs. What is prevalent today is a version of the web called Web 2.0 that had its beginnings decades ago and matured significantly over the past decade. For most of us, doing business without it is unimaginable.

As Web 2.0 evolves and expands, we are now at the cusp of the third generation of the internet, known as Web 3.0. Based on blockchain technology, this signals a movement from centralized enterprise-owned platforms to decentralized blockchain-based architectures that are creator-owned and distribute data over multiple networks. 

Today, most Web 2.0 online services run on cloud-based interaction, storage, and processing, such as Google Cloud and Amazon Web Services. The future would hold offerings built on the blockchain. This is likely to make a huge difference in distribution of data and ownership of information, which today is with a few large enterprises who derive revenues from user generated data.

Web 3.0 is likely to shift power from today’s technology giants and balance the playing field by giving control to the masses, bringing in a democratized digital world. Individual developers would be able to build with next-generation tools, allowing them to create self-governing organizations and participate in the new economy. A classical change we are likely to see is the reduction of dependence on user-generated data, which is the hallmark of our modern digital economy.

Web 3.0 implies a complete departure from the legacy architecture. Evolution of business models built upon a universe of decentralized apps to meet consumer needs would be the future. Users and businesses could undertake transactions with and make payments to anyone anywhere, without dependence on centralized organizations. Blockchain solutions that are transparent, efficient, and verifiable could be of immense use not only to business owners but to regulators as well.

From an Indian perspective, the Government has recently announced a national strategy on Blockchain that provides a look into the Government’s plans to create trusted digital platforms through shared blockchain infrastructure. The Ministry of Electronics and Information Technology has released a document listing area of use that are being explored. The sectors identified are education, governance, finance & banking, healthcare, logistics, cyber security, media, legal, power sector, etc.

This is just the start of a revolution that we would soon see. The business value of blockchain solutions are expected at USD 176b by 2025 and USD 1.3t by 2030.

While blockchain platforms could make multiple opportunities possible, equally complex are the regulatory aspects these would entail. The Ministry has identified five areas of weakness in the technology — scalability, security, interoperability, data localization and disposal of records — it needs to carefully envision and address these implications to create truly dependable and trustable use cases.

Amid these developments, the largest tech companies have publicly expressed work on the development of the metaverse. Though people sometimes use the terms metaverse and Web 3.0 as one, they pertain to two distinct concepts. Web 3.0 is the enabler for development of the metaverse.

The metaverse is a collection of 3D virtual spaces that permit users to engage with one another through their virtual selves, often referred to as digital avatars. Using augmented reality and virtual reality technology, this is already prevalent in the gaming industry, but the aim is to apply the concept to everything that makes us socialize, participate, and interact. In a release for its recent acquisition of a game developer, a technology giant stated that gaming will play a key role in the development of metaverse platforms.

We are already seeing businesses such as fashion majors set up virtual shops that permit potential customers to browse through offerings in 3D and trademark filings by a leading food chain for shops in the metaverse that may serve virtual food and beverages. This concept is likely to change the way we work and play, with many leading companies knocking at the doors of the metaverse.

In order to provide a robust foundation upon which the private sector can build, the Government must ensure that adequate physical infrastructure is available in the form of connectivity, data storage systems, etc. The expected burgeoning of the technology sector would provide an opportunity to various industries, such as IT component manufacturers and cloud service providers.

One of the key enablers to powering computational requirements of industry could be the use of quantum computing systems. While at a nascent stage right now, this technology could provide significant breakthroughs for challenges faced by enterprises. Theoretically capable of advanced problem solving, such systems are likely to be far more versatile than present ones, potentially of use in every industry. From dealing with current business areas in an exponentially quicker manner to cracking extremely complex problems that are presently unsolvable, use cases of quantum computing cut across industries. These range from development and testing of pharmaceutical products to supply chain effectiveness to predicting climate change and many more.

From a regulatory perspective too, technology would be all pervasive. Blockchain could become instrumental in compliance. Upon inclusion of technology built on this concept, a fundamental change in the way governance is undertaken may be that source documentation would no more required in the form of invoices, timesheets, receipts, deposit slips, etc. It would not be surprising to see no filings such as tax returns required in a few years as governments would have access permitting knowledge of transactions on a real-time basis.

Situations of concealment and misrepresentation are likely to be very rare, in view of the authentication processes that such technology permits. Physical searches and surveys may not be needed anymore. Without differences in knowledge of the facts involved, tax litigation should hopefully be limited to issues which are purely legal in nature, greatly reducing resolution timelines. From the perspective of change in regulations, technology is likely to result in real-time updates in the law being possible, both from a standpoint of declaration by governments as also implementation by taxpayers.

(EY India Senior Manager Khushroo Patel also contributed to this article.)

Summary

All in all, business models and regulatory compliance are bound to change dramatically over the next few years, and this could provide huge opportunities to Indian entrepreneurs. As the software hub of the world, Digital India is well-poised to become a leader in the technology space.

About this article

Authors
Ravi Mahajan

EY India Technology, Media & Telecom Partner

Experienced tax professional advising domestic and multinational companies in areas of tax planning, compliance, treaty interpretation, transfer pricing, tax controversy and resolutions.

Mahesh Makhija

EY India Technology Consulting Leader

Technology evangelist, a facilitator of customer centricity and innovation

Related topics Tax Technology Digital Blockchain