session 1- services
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Service Sector in India
03-Jan-2011 MMS-SEM-IV
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In this session. Service Sector
Indian Service Sectorpost liberalization
Major Sub-Sector of service industry
Future trends in Service Industry
Definition of Service
Nature of service
Classification of Services
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3MITES - Shrikant Kulkarni
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Service Sector
Service sector is the lifeline for the social economicgrowth of a country.
It is today the largest and fastest growing sectorglobally contributing more to the global output andemploying more people than any other sector.
The real reason for the growth of the service sector isdue to the increase in urbanization, privatization andmore demand for intermediate and final consumerservices.
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Service Sector Availability of quality services is vital for the well
being of the economy.
In advanced economies the growth in the primary
and secondary sectors are directly dependent on the
growth of services like banking, insurance, trade,
commerce, entertainment etc.
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Indian Service Sector Indian service sector has witnessed a major boom and is one of
the major contributors to both employment and national incomein recent times.
The activities under the purview of the service sector are quitediverse. Trading, transportation and communication,financial, real estate and business services, community,social and personal services come within the gambit of theservice industry.
One of the key service industry in India would be health andeducation. They are vital for the countrys economic stability.A robust healthcare system helps to create a strong and diligenthuman capital, who in turn can contribute productively to thenations growth.
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Post Liberalization The Indian economy has moved from agriculture based
economy to a knowledge based economy.
Today the IT industry and ITE'S industry are the dominantindustry in the service sector.
Media and entertainment have also seen tremendous growth
in the past few years.
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Sub Sectors for Service Industry Information Technology Industry
ITES sector
Retailing Financial Services-Banking And Insurance
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Information Technology Industry
The Information Technology industry has achieved phenomenalgrowth after liberalization.
The industry has performed exceedingly well amidst toughglobal competition.
Being knowledge based industry; India has been able to
leverage the global markets, because of the huge pool ofengineering talent available and the proficiency in Englishlanguage among the middle class.
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ITES sectorThe ITES sector has also leveraged the global changes positively
to emerge as one of the prominent industries.
Some of the services covered by the ITES industry would be:
Customer interaction services -Non voice and Voice.
Back office, revenue accounting, data entry, data conversion,HR services.
Medical Transcription. Content development and animation.
Remote education, market research and GIS
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Retailing Prior to liberalization, India had one of the most underdeveloped
retail sectors in the world.
After liberalization the scenario changed dramatically. Organizedretailing with prominence on self service and chain stores has
changed the dynamics of retailing.
In most of the tier I and tier II cities supermarket chainsmushroomed, catering to the needs of vibrant middle class. This
indirectly contributed to the growth of the packaged food
industry and other consumer goods.
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Banking SectorThe major changes in the banking sector after liberalization are:
Nationalized banks including SBI were allowed to sell stakesto private sector and private investors were allowed to enterthe banking domain.
Foreign banks were given greater access to the domesticmarket, both as subsidiaries and branches, provided theforeign banks maintained a minimum assigned capital and
would be governed by the same rules and regulationsgoverning domestic banks.
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Banking Sector contd. Banks were given greater freedom to leverage
the capital markets and determine their asset
portfolios. The banks were allowed to provide advances
against equity provided as collateral and
provide bank guarantees to the brokingcommunity.
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Insurance Sector The Insurance Regulatory and Development Authority Act
1999 (IRDA Act) allowed the participation of privateinsurance companies in the insurance sector.
The primary role of IRDA was to safeguard the interest ofinsurance policy holders, to regulate, promote and ensureorderly growth of the insurance industry.
The insurance sector could invest in the capital markets andother than traditional insurance products, various market linkinsurance products were available to the end customer tochoose from.
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Future Trends in Services Industry Globally outsourcing industry would continue to grow.
Following the success of US and UK, more countries in the
European Union would outsource their business.
Technological power shift from the West to the East as India
and China emerge as major players.
Political backlash over outsourcing would come down ascompanies reap the benefit of outsourcing.
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Definition of Service Activities, benefits or satisfaction, which are
offered for sale, or provided in connection
with the sale of goods.---- AMA
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Growing Importance of Services in
Marketing Economic well being of population
Changing lifestyle
Complexity of product Focus on core work
Government Policies
Technology as a key driver for serviceinnovation
Internationalization
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Nature of Services Intangibility
Heterogeneity
Inseparability
Perishability
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Intangibility Service cannot be measured
Service is not consistent
Quality of services cannot be measured
SO WHAT MEASURES ARE TO BE
TAKEN TO STANDARDIZE SERVICES
BY ORGANIZATIONS???
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Heterogeneity Services are not identical
It depends on
person
time
place
WHAT IS BENEFIT OF SERVICES BEING
HETEROGENIOUS IN NATURE??
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Inseparability Services cannot be stored
So there has to be greater interaction between
customers and service provider
Production and consumption occurs
simultaneously
WHAT SHOULD COMPANY DO??
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Perishability Services cannot be stored
WHAT SHOULD BE SERVICE PROVIDER
STRATEGY ???
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Classification of services
Degree of Involvement of the customer
Service Tangibility Skills and expertise Required
Business Orientation of Service Provider
Type of End-user
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Classification on Basis of the Degree if
Involvement of the customer
People Processing
Possession Processing
Mental stimulus Processing
Information Processing
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Examples
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Classification on the basis of the Service
Tangibility
Highly tangible
Service linked to tangible goods
Tangible goods linked to services
Highly Intangible
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Examples
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Classification on basis of skills and expertise
Required
Professional services
Non-Professional services
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Classification on the basis of the business
Orientation of Service Provider
Not- for profit Organization
Commercial organization
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Examples
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Classification on basis of the Type of End-user
Consumer services
Business- to- business services
Industrial Services
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Examples
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Thats all for today !!!
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