Service Industry in India

Service industry, an industry in that part of the economy that creates services rather than tangible objects. It is also known as tertiary sector. Economists divide all economic activity into two broad categories, goods and services. Goods-producing industries are agriculture, mining, manufacturing, and construction; each of them creates some kind of tangible object. Service industries include everything else: banking, communications, wholesale and retail trade, health & spa, airlines, tourism, hotel management, all professional services such as engineering, computer software development, and medicine, nonprofit economic activity, all consumer services, and all government services, including defense and administration of justice. A services-dominated economy is characteristic of developed countries. In less-developed countries most people are employed in primary activities such as agriculture and mining.

The services sector, with around 52 per cent contribution to the Gross Domestic Product (GDP) in 2014-15, has made rapid strides in the past decade and a half to emerge as the largest and one of the fastest-growing sectors of the economy. The services sector is not only the dominant sector in India’s GDP, but has also attracted significant foreign investment flows, contributed significantly to exports as well as provided large-scale employment. India’s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.

The services sector contributed US$ 783 billion to the 2014-15 GDP (at constant prices) growing at Compound Annual Growth Rate (CAGR) of 9 per cent, faster than the overall GDP CAGR of 6.2 per cent in the past four years.

Out of overall services sector, the sub-sector comprising financial services, real estate and professional services contributed US$ 305.8 billion or 20.5 per cent to the GDP. The sub-sector of community, social and personal services contributed US$ 188.2 billion or 12.6 per cent to the GDP. The third-largest sub-segment comprising trade, repair services, hotels and restaurants contributed nearly equal or US$ 187.9 billion or 12.5 per cent to the GDP, while growing the fastest at 11.7 per cent CAGR over the period 2011-12 to 2014-15.

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Service Industry and Hiring Trends in India

Services industry remains an important contributor to a nation’s gross domestic product (GDP). The latest job seekers in Services industry can expect brisk hiring activity during the coming quarter with employers reporting a Net Employment Outlook of +38%, as per the latest report by Manpower Employment Outlook Survey, released on December 8, 2015. Hiring plans are 2 percentage points stronger when compared with the previous quarter.

Manpower Group interviewed nearly 59,000 employers across 42 countries and territories to forecast labor market activity* in Quarter 3 2015. All participants were asked, “How do you anticipate total employment at your location to change in the three months to the end of September 2015 as compared to the current quarter?”

Third-quarter forecasts are mostly positive with employers in 40 of 42 countries and territories expecting to add to their workforces by varying margins over the next three months. The most optimistic Net Employment Outlooks are reported in Taiwan, India, Japan, Hong Kong and the United States.

The Manpower Survey results are further strengthened with other surveys including Antal Foundation, a British recruitment firm, which found 88 per cent of Indian employeers looking forward to increase their human resource count. While, the study by Monster.com, a job portal, estimate the recruiters to have increased their hiring by 53 per cent in November 2015.

In addition, to positive data coming from various surveys, the Organisation for Economic Cooperation and Development (OECD) has highlighted that, “India is witnessing a firming growth, even as most developed and developing economies as most developed and developing economies are seeing mixed trends.”

Creating an overall favourable environment, the top notchs of the industry seem to be in agreement with the Progressive India and wants to be part of the Government’s “Make in India” and “Skill India” band wagon. Dr Gulshan Sharma, Director General, International Chamber for Services Industry (ICSI), welcome these positive reports and is in agreement with the scope of creating effective and skilled manpower in India. He continuously strives to enhance the opportunity options for youth in North India and North East in particular.

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Carrer Prorpects in Distribution Services

Distribution Services

• This includes a wide spectrum of sectors i.e Retail sector, wholesale sector, franchise sector, logistics and supply chain management sector and commission agents. They act as an intermediary link between the manufacturers and the consumers of goods. They specialise in providing a wide range of services for both the producers as well as the consumers. Disposable incomes are expected to rise at an average of 8.5% per annum until 2015.Retailing in India is one of the pillars of its economy and is one of the top five retail markets in the world by economic value. Wholesale Market- In the present scenario, their roles have changed to a large extent due to the enormous growth that the economy has witnessed. the need for a wholesale market is gradually diminishing. Commission agents-It is also known as commercial agents--work as middlemen between vendors and buyers.

. RETAIL

·         GDP-14-15 per cent

·         The present value of the Indian retail market is estimated to be around Rs. 12,00,000 crore($270 billion)

·         The sector grew 13% in FY 2013 and FY 2014 after 20% plus growth in the previous financial years. 

·         Permitted 51% FDI in multi brand retail and 100% FDI in single brand retail

·         The overall retail market is expected to grow at 15 % CAGR from Rs 23 trillion in 2011-12 to Rs 47 trillion in 2016-17 over the next five years. 

·         The drivers will be raising income levels, increasing urbanisation, plastic money, favourable demographics and rising rural consumption.

WHOLESALE

·         GDP-6.3percent

·         The specialised knowledge and skill of wholesalers increases the efficiency of the distribution network.

FRANCHISING

·         GDP -4.3percent

·         Though at a nascent stage the industry has witnessed 30- 35 percent growth in the last 4 years

·         There are approximately 1150 national and international business format franchise systems in India .

·         Around 8 to 10 per cent Indian franchise systems have entered international markets.

·         There are an estimated 70, 000 units operating in business format franchises.

·         Some 500000 persons are employed in business format franchise organizations.

·          innovative strategies like “Indianisation” of its products and marketing techniques must be employed by a foreign franchisor to further access the sizable market of India. In a franchised business, over 90 per cent succeed.

LOGISTICS AND SCM(SUPPLY CHAIN MANAGEMENT)-

·         GDP-13(SCM)

·         Growth rate -4.3

·         An improvement in the transport facility has made the interaction between the retailer and manufacturer easier

Employment opportunities

·         The retail sector has also contributed to 8% of the employment in the country. Indian Retail Industry would generate employment for more than 2.5 million people, (predicts an analysis by Ma Foi Management Consultants Ltd). Today the modern retail/retail services sector has the potential of creating over 2 million new (direct) jobs within the next 6 years in the country.

·         The franchising industry is expected to employ 1.4 crore people by 2017

• They say ‘If you aren’t in IT or entertainment,you ought to be in retailing. Or you’re missingthe boom times altogether.’ In India, the retail sector is the second largest employer after agriculture. The retailing sector in India is highly fragmented and predominantly consists of small independent, owner-managed shops. One quarter of the world’s youth live in India. More than 50% of the Indian population is below 25 years of age.

Top leading Companies

·         Pantaloon, TATA GROUP,RELIANCE,BIRLA, Archies, Bata India Ltd, Big Bazaar, Crossword, Ebony Retail Holdings Ltd., Fabmall, Food Bazaar, Globus Stores Pvt. Ltd

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