*Infy, Tech Mahindra et al. have dipped their toes in metaverse waters. Can they cash in on the mania? – The Economic Times

Clipped from: https://economictimes.indiatimes.com/prime/technology-and-startups/infy-tech-mahindra-et-al-have-dipped-their-toes-in-metaverse-waters-can-they-cash-in-on-the-mania/primearticleshow/92989378.cms

SynopsisInfosys, Tech Mahindra have carved out special centres to cash in on the metaverse mania which promises to offer around 12% higher gross margins than digital transformation projects. The challenge will be to scale from mere ‘proof-of-concept’ type delivery and execute large business transformation projects in the metaverse space.

The history of India’s USD230 billion IT services businesses has mostly been that of playing catch up with global peers, including Accenture, Capgemini, IBM.

Often India’s IT sector watchers say, “There’s a three to five years lag with global tech services providers.” With plentiful harvest of the low hanging fruit, Indian IT mostly took the safer path.

But now, with perhaps considerable heft and size, at least some of the players are trying out new things as they roll out. Indian IT firms’ response to the current metaverse mania stands out.

Infosys, earlier this year, launched a Metaverse Foundry. Around the same time Tech Mahindra started MVerse. Both Indian IT firms launched their metaverse foray just around the time Accenture started Continuum. All this happened in the last four to five months. According to Statista, the global metaverse business stood at USD38.85 billion in 2021. Regarded as the next iteration of the Internet, metaverse business is expected to increase to USD47.48 billion in 2022, and surge to USD678 billion by 2030. No IT company can afford to let go of such a business opportunity.

It is not like heavyweights such as TCS, Wipro, HCL don’t have their takes on metaverse. But Infosys and Tech Mahindra have gone on to start dedicated centres, building teams and templatised solutions, for retail, telecom and banking sectors.

Metaverse market revenue worldwide@2x

In the metaverse they see not just a new business opportunity but one that promises to offer better margins than traditional businesses — around 12%-15% higher gross margins.

But for metaverse business to come, they need to demonstrate what they can deliver.

And this is where such dedicated centres come into play.

Infosys’s forehand
Infosys has already done metaverse projects with the Australian Open and French Open. In March this year, Infosys extended its contract with Roland Garros — which runs the French Open tennis tournament — by five years, with a focus on digital innovation and building extended reality and experiences like metaverse.

Ravi Kumar S, president, Infosys, who leads the company’s metaverse practice says, “As of now we see metaverse being tapped and explored by retail, shopping and gaming industries. It is mostly discretionary spending as of now, but with the space gradually evolving and moving towards maturity, this will potentially change in the future.” Kumar started his career as a nuclear scientist at Bhabha Atomic Research Centre and in the last two decades has held various positions at Infosys, driving digital transformation and consulting services among other roles.

“Most of the current efforts are like proof-of-concepts. But unlike in the past wave of new technology, this time around service providers want to be ready as the market opens up.”

— Amit Singh, executive director & head – IT, Avendus Capital

Gaurav Vasu, founder & CEO, Unearthinsight, a research firm, points out, “Companies are doing projects around AR, VR, MR which are part of the metaverse. In the next few years 8%-10% of the business could come from the various building blocks of the metaverse.”

Vasu sees opportunities in co-developing virtual worlds to maintain AR/VR services for gaming, healthcare, social media, e-commerce, real estate and advertising clients. Some of the services firms have metaverse use-cases in the form of 3D avatars, 3D worlds, cities, spaces, digital assets and digital economy.

Amit Singh, executive director & head of IT at Avendus Capital says, “There’s demand for metaverse solutions but not enough capability. That’s why these dedicated centres make sense.” He believes that once Fortune 500 customers see use-cases and ability to monetise, they will scale quickly and these centres like the Infosys Foundry and Tech Mverse will be able to grab the opportunity quickly.

Some of the Fortune 500 firms have already started taking baby steps.

BMW is using AR, VR to design concept vehicles. Deutsche Telekom, Audi, Nestle, P&G are among other Fortune 500 companies using the metaverse to find new ways to interact with prospective customers and add value for them and retail partners.

“Metaverse margins will be higher than traditional services, much like Blockchain commands 12%-15% higher gross margins,” Singh adds.

This is what the early movers hope to grab.

Inside the Foundry
Infosys sees hybrid life becoming the norm in the post-Covid world and this is why it is investing in building metaverse solutions capability.

Infosys Metaverse Foundry is a set of 100 ready to use templates for clients. For example, Infosys is offering a template for businesses to set up immersive retail experiences where shoppers can explore a branded metaverse environment, buy NFTs or connect to an online checkout counter to get things delivered in the physical world. Infosys is selling this as a service-on-tap.

Kumar says, “Experiences such as the ability to hold meetings in the metaverse and continue the same in the real world or shop in the metaverse and have products delivered to a real-world address will be of immense value with hybrid living and working becoming the new norm.”

For instance, metaverse for education and workplace (for onboarding new hires) is gaining traction. “Clients are looking for viable applications which offer business value rather than unique IPs. This is where our 100-plus use-cases come in handy,” adds Kumar.

Indian IT and Metaverse@2x

Infosys has a small team of around 500 experts working on skills related to gaming, such as Unity, CAD tools and open-source frameworks. It sees opportunity in creating templates for the metaverse. Though Kumar is reluctant to share the business that could come from this effort. “It’s too early. Though we have been getting positive traction from our clients since we started the Foundry.”

Some of its business engagements have been creating an extended digital-physical store for Australian Open (tennis). People can shop for merchandise in the metaverse. For the French Open, Infosys created mixed reality experiences where avatars of fans could interact with others and shop for merchandise.

Construction and mining equipment maker Komatsu also partnered with Infosys Metaverse Foundry to create metaverse solutions for them.

Banking on MVerse
For USD5.2 billion worth IT company Tech Mahindra, metaverse is a combination of software and hardware capabilities to offer a 3D visual experience to clients.

The Pune-based company is offering avatar-as-a-service, meta environment development, NFT marketplaces, content management and other services.

The company is eyeing opportunities both in India and outside. Kunal Purohit, chief digital services officer, Tech Mahindra says, “There are several factors contributing to the growth of the metaverse in India. That includes the technology ecosystem, growing entrepreneurship, smartphone adoption, affordable mobile data and the large millennial population.” A TechM veteran, Purohit leads the company’s digital and analytics capability solutions units globally.

Tech Mahindra is focussed on creating industry and use-case specific metaverse environments including factories-of-the-future, drug discovery among other things. It already has a team of 100 people for metaverse projects which will expand to 1,000 within a year.

The company is working on use-cases like opening car dealerships in the metaverse, a platform to host NFTs from artists around the world, a virtual bank in the metaverse and a gaming centre.

On July 8, 2022, Union Bank of India launched a metaverse lounge and open banking sandbox environment (to test out new products) in partnership with Tech Mahindra.

Uni-verse — the bank’s metaverse lounge — will host product information and videos. Avatars of customers can go around the lounge, get information of the bank’s deposits, loans, government welfare schemes, and digital initiatives as if they are experiencing the real world.

The country’s largest bank, SBI, is also getting closer to launching its metaverse presence.

Demand and application
Tech Mahindra is seeing demand for metaverse solutions from global customers in banking, retail and training space. For instance, the oil and gas industry spends large sums on field training. It could cut training costs up to 30% by using metaverse.

While Infosys, Tech Mahindra and others are seeing demand increase for metaverse projects, these are still small between USD1 million to USD5 million as of now. However, margins are much higher for metaverse contracts, like it has been in the past for any new tech.

Services providers see deployment in backend infrastructure including 5G networks deployment & adoption, greater use of NFTs, AR, VR leading to expansion in demand for metaverse services.

“Most of the current efforts are like proof-of-concepts. But unlike in the past wave of new technology, this time around service providers want to be ready as the market opens up,” says Singh from Avendus.

Dedicated centres and labs will help them scale gradually and be ready for the big contracts. Singh also points to the traditional catch up that Indian IT plays with global peers. Can they narrow the gap now?

Accenture started onboarding 1,50,000 new hires in the metaverse. On the client side it envisions deep industry specific applications. For instance, it is working on applications where surgical teams learn new procedures without having to physically be in the same operating room.

Other services providers including heavyweight TCS has made its initial investment in the metaverse through its Extended Reality (XR) Lab where they have an R&D team piloting and executing several proofs of concept and use-cases.

Similarly HCL expects XR to scale up in a few years as companies obsessed with redefining customer experience make XR-supported service a part of their mainstream.

Yugal Joshi, partner Everest Group, sees Indian companies trying to create “pull through demand”. Global clients are seeking tech partners to deploy solutions like creating digital twins or virtual onboarding of people. They might initially do it for free (if they already have deep engagement with the client), set up a lab to do it or showcase it to clients.

“Indian IT typically waits for revenue to invest. India is not R&D heavy (unlike Accenture & other global providers). We are fast followers with focus on more near term, particularly in these uncertain times,” adds Joshi.

At least a few providers are now showing a rare focus on moonshots provided by the metaverse mania.

(Graphics by Sadhana Saxena)
(Originally published on Jul 20, 2022, 12:01 AM IST)

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