An industry made up of companies that primarily earn revenue through providing intangible products and services.
Service industry companies are involved in retail, transport, distribution, food services, as well as other service-dominated businesses. Also called service sector, tertiary sector of industry.
• The percentage of people in a country who are employed in services sector or tertiary sector jobs is a determinant of the economic development of that nation.
• The shift from primary and secondary activities to tertiary activities by the citizens of a country indicates that it is on the path of progress.
• India's services sector accounts for around 60 per cent of its gross domestic product (GDP) and has matured considerably during the last few years.
• The growth in the services sector can be attributed mostly to the emergence of the Indian Information Technology (IT) as well as e-commerce.
• The services sector in India comprises a wide range of activities such as transportation, logistics, financial, business process outsourcing services, healthcare, trading, and consultancies, among many others.
• Trade
• Hotels and Restaurants
• Railways
• Other Transport & Storage
• Communication (Post, Telecom)
• Banking
• Insurance
• Private houses, Real Estate
• Business Services
• Public Administration; Defence
• Personal Services
• Community Services
• Other Services
• India's journey on the path of economic reforms has transformed it to one of the world's fastest growing economies.
• Its large and growing population is its best asset and can quadruple GDP and catapult India to the league of developed economies over the next decade.
• All this if a billion could be transformed into a productive workforce.
1. INFORMATION TECHNOLOGY
The IT sector has been India's sunshine sector for quite some time now.
The industry has contributed considerably to changing India's image from a slow developing economy to a global player in providing world class technology solutions. According to the IBEF (India Brand Equity Foundation) figures, the Indian IT industry is set to touch $225 billion by 2020.
2. TELECOM
India's telecom story is only getting better.
According to Zinnov estimates, India already has nearly 850 million mobile phone subscribers, with a 15% smart phone penetration.
All this points to a penetration that is fuelling the growth of enterprise mobility in India, which will lead to significant employment growth.
3. HEALTHCARE
There are clear indications that healthcare is going to be a major sector that stimulates economic growth and contribute to employment.
Over 40 million new jobs are expected to be generated by 2020, as per a report titled 'India's New Opportunities-2020' by the All India Management Association, Boston Consulting Group and the Confederation of Indian Industries (CII).
The Indian healthcare industry also has advantages over other developing countries in becoming a global hub for medical tourism.
The medical treatment and educational services in India are a fraction of the cost in developed countries.
4. INFRASTRUCTURE
India's infrastructure growth has been exponential over the past decade.
Today, we are the fourth largest and probably the second-fastest growing economy, with infrastructure being one of the cornerstones.
The infrastructure industry in India is highly fragmented and hence difficult to gunge its exact size and the jobs it generates each year in absolute terms.
However, be it roads and highways, railways, aviation, shipping, energy, power or oil & gas, the Indian government and the various state governments seem to making rapid progress.
This has led to significant employment generation, though a majority of it is still in the unorganized sector. Over the next 10 years, the infrastructure sector in India will need to continue its growth momentum and is likely to maintain a growth rate anywhere between 7-10%, a very healthy sign.
5. RETAIL
Over the past few months, the retail sector has grabbed headlines with talks of 100% FDI in single brand retail, which is currently capped at 51%.
While the outcome is still undecided, the opening up of India's retail will create a stronger, organized industry that will help in generating employment.
Today, only a small part of retail in India is organized. Despite this, it is estimated that the sector in India is worth more than $400 billion, with domestic and international players planning to expand across the country.
Industry leaders predict that the next phase of growth will emerge from rural markets. There are projections of the workforce doubling by 2015, from the current five lakhs in both organized and unorganized sector.
The retail market in India is estimated at about US$ 410 billion and constitutes about 60% of private consumption and about 35% of India's GDP.
With Indian GDP expected to grow at 7-8 % in the next coming years, the retail market is expected to touch US $860 billion by 2018.
In recent years, this sector has witnessed a lot of interest from both domestic and global players, who have committed investments worth US $30 billion, which will lead to increase in the share of modern retail from the current 4.5% to almost 25% of the total retail market by 2018.
India has a vast network of Small and Medium Enterprises (SMEs), which can be developed to become large suppliers feeding the vast network of these retailers.
However, these SMEs are facing many problems like lack of awareness of global trends, limited marketing efforts and lack of capital among others.
Considering their operating costs, entrepreneurial skills and availability of key raw material in the country, there is an opportunity for Government of India to help them grow and build world class manufacturing hubs similar to China.
Why service sector booming
• Project delivery excellence: And all of this has been aided by the quality of the delivery of projects that Indian companies have managed.
• Leading research groups like Meta have put the delivery excellence of Indian software companies like Wipro, TCS and Cognizant on a par with that of the best multinationals like EDS Corporation and Accenture and at times ahead of them.
• Expansion into new markets: Indian software services companies once used to focus on North America but many have now expanded operations to China, Eastern Europe, South Africa, Australia, New Zealand and Latin America.
• New services are being offered: At the same time Indian companies have been consciously expanding the services that they offer clients. The new services include consulting, infrastructure solutions, package implementation, business process outsourcing and even testing, apart from increasing the quantum of bread and butter engagements like software application maintenance and development.
• Customer mining: Indian companies are not only acquiring more customers but are also selling more services to existing customers. Cognizant believes so much in mining its customers that it has more relationship managers than sales and marketing professionals.
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