OPPORTUNITIES AND CHALLENGES IN INDIAN SERVICE SECTOR
Presented By: Chetan.D.J Chetan.D.J(MBA0900809) (MBA0900809) Suprita.K (MBA09008021)
Agenda
Meaning
Indian Service Sector
Characteristics
Challenges of Various Service Sector
Opportunities of Various Sector
Budget Inclusions
Meaning service is the intangible equivalent of an economic good.
A
Public
services are those society pays for as a whole through taxes and other means. Service sector is the lifeline for the social economic growth of a country. It is today the largest and fastest growing sector globally contributing more to the global output and employing more people than any other sector. The real reason for the growth of the service sector is due to the increase in urbanization, privatization and more demand for intermediate and final consumer services. 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.
Indian Service Sector
In alignment with the global trends, Indian service sector has witnessed a major boom and is one of the major contributors to both employment and national income in recent times. The activities under the purview of the service sector are quite diverse. One of the key service industry in India would be health and education. They are vital for the country¶s economic stability. strong healthcare system helps to create a strong and careful human capital, who in turn can contribute productively to the nation¶s growth. A
The share of of service sector sector in India¶s GDP is 54%. In India, service sector has become a dominant contributor, such that the success in this regard has been called as µIndia¶s services revolution.
Services or the "tertiary sector" of the economy covers a wide range of activities like : Hotels and Restaurants Railways Trade Other Transport & Storage Communication ( Post, Telecom) Banking Insurance Dwellings, Real Estate Business Services Public Administration; Defence Personal Services Community Services R etailing IT Other Services
Service Characteristics
1.
Intangibility Services are intangible and insubstantial: they cannot be touched, gripped, handled, looked at, smelled, tasted or heard. A service cannot be (re)sold or owned by somebody, neither can it be turned over from the service provider to the service consumer nor returned from the service consumer to the service provider. Solely, the service delivery can be commissioned to a service provider who must generate and render the service at the distinct request of an authorized service consumer.
2.
Perishability The service relevant resources, processes and systems are assigned for service delivery during a definite period in time. If the designated or scheduled service consumer does not request and consume the service during this period, the service cannot be performed for him. From the perspective of the service provider, this this is is aa lost business business opportunity as he cannot charge any service delivery; potentially, he can assign the resources, processes and systems to another service consumer who requests a service.
Inseparability The service provider is crucial for service delivery as he must promptly generate and render the service to the requesting service consumer. Additionally, the service consumer is inseparable from service delivery because he is involved in it from requesting it up to consuming the rendered benefits.
3.
4.
Simultaneity Services are rendered and consumed during the same period of time. As soon as the service consumer has requested the service (delivery), the particular service must be generated from scratch without any delay and friction and the service consumer immediately consumes the rendered benefits for executing his upcoming activity or task.
5.
Variability
Each service is unique. It is oneone -time generated, rendered and consumed and can never be exactly repeated as the point in time, location, circumstances, conditions, current configurations and/or assigned resources are different for the next delivery, even if the same service consumer requests the same service
Challenges Ahead IT and ITES
The sustainability of impressive growth of Indian economy has been questioned in the wake of some challenges in the form of lack of social infrastructure, physical infrastructure; IT infrastructure ,agricultural and industrial sector reforms, rupee appreciation etc. Challenges in the field of IT and ITES like rising labour costs, rapid growth in demand for talented manpower/quality staff, high attrition rate, etc are some other limiting factors .The growth of IT and ITES is having social, economic, health, ethical and environmental implications also . It is also important to point out here that the measurement of output , productivity , nonnon-availability of data or availability of data after a time lag are other problems confronted with in case of services . The problem gets further compounded because of the entry of new species of services (like IT, ITES etc ) & lack of development of concepts on the one hand and nonnon-inclusion of unpaid households on the other. Therefore, it is too difficult to achieve the same level of output in terms of quality.
Insurance sector sector - - Hurdles:
This industry has been growing between 15 and 20 percent, but it lags for behind its global counterparts. This was due to the following reasons. . Insurance companies do not create products that the the market wants. wants. Insurance awareness among the general public is low. Term-- Insurance Plants are not promoted. Term Unit -linked assurances are not available. Returns from Insurance Products are low. There is a deficiency of innovative and buyerbuyer -friendly insurance products. Most agents and development officers are interested only in producing new business servicing existing customers satisfactorily has not been a priority for them the obvious reason to this is that incentives which are based on new business generation and not on satisfactory serving of existing customers. I t is surprise to note that more than 10% of LIC policies are surrendered or get lapsed every year. There is no market research worth the name and computerization is woefully
BANK CHALLENGES
First, the market is seeing irregular growth driven by new products and services that include opportunities in credit cards, consumer finance and wealth management on the retail side, and in feefee- based based income and investment banking on the wholesale banking side. These require new skills in sales & marketing, credit and operations. Second, banks will no longer enjoy bonus treasury gains that the decadedecadelong worldly decline in interest rates provided. This will expose the weaker banks. Third, with increased interest in India, competition from foreign banks will only build up. Fourth, given the demographic shifts resulting from changes in age profile and household income, consumers will increasingly demand enhanced institutional capabilities and service levels from banks.
Sector -Challenges Challenges R etail Sector-
The challenges facing the Indian organized retail sector are various and these are stopping the Indian retail industry from reaching its full potential. The behavior pattern of the Indian consumer have undergone a major change. This have happened for the Indian consumer is earning more now, western influences, women working force is increasing, desire for luxury items and better quality The biggest challenge facing the Indian organized retail sector is the lack of retail space. Trained manpower shortage is a challenge facing the organized retail sector in India. The Indian government have allowed 51% foreign direct investment (FDI) in the India retail sector to one brand shops only. This have made the entry of global retail giants to organized retail sector in India difficult. This is a challenge being faced by the Indian organized retail sector.
Prospects for Growth in the Services Sector
One of the major drivers of service sector growth in the post globalization era in India is the IT and ITES sector. ³The IT and B PO industries can become major growth engines for India, India¶s IT and B PO industries could account for 1010 -12% of India¶s GDP by 2015
India¶s offshore IT and B PO industries hold the potential to create over 9 million jobs by 2010, 2.3 million direct jobs and 6.5 million indirect jobs.
The revenue generation from total software and services segment is likely to touch $ 6060 - billion billion mark by 2010. There is a huge potential for growth in the services sector because of increase in disposable income, increasing urbanization, growing middle class, a population ³bulge´ in the working age groups providing µdemographic window of opportunity,¶ and emergence of a wide array of unconventional /new services like IT, ITES, new financial services (ATMs,credit cards) and tourism services (eco (eco--tourism, health tourism) etc.
Insurance Sector Sector - - Emerging Areas:
Demand for Pension Plans
Separateness of Banking and Insurance
Role of Information Techno Techno--logy
Using Postal Network
Creating Insurance awareness
Innovative Products
Insurance sector in India- India - Future Scenario:
In India, only 10% of the market share has been tapped by LIC and GIC and the balance 90% of the market still remains untapped. This vast Potential can be tapped only by a large number of insurance. To serve the population of more than 100 crore Indians, Indian insurance market offers tremendous opportunities to private insurers. With the increase in the life expectancy of individuals and disintegration of Joint ± ± family Each individual now has arranged cover for himself and for his family. Therefore, coverage of insurers has to grow very fast.
f Retail O pportunities O
Sector
The retail industry in India amounted to US$ 200 billion in 2006, and out of this amount the Indian organized retail sector amounted to US$ 6.4 billion. The opportunities in India organized retail sector can be judged from the fact that by 2010 it is expected to rise to US$ 23 billion. The Indian government in 2005 allowed foreign direct investment (FDI) in single brand retail to 51%. This have opened up a lot of opportunities in India organized retail sector. In fact 325 departmental stores, 300 new malls, and 1500 supermarkets are being built which shows the tremendous opportunities in the organized retail sector in India. The opportunities in the organized retail sector in India have also increased with the desire of many global retail giants to set up shop here. The global retail giants who are entering the Indian organized retail sector are:
Tesco Metro AG
. WalWal- Mart . Carrefour SA
2011 Budget
Service tax rate kept at 10 percent Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C restaurants serving liquor, some category of hospitals, diagnostic tests. Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in economy class. On higher classes, it will be ten per cent flat. SECTOR SPENDING To allocate more than 1.64 trillion rupees to defence sector in 2011--12 2011
To allocate 520.5 billion rupees for the education sector. Rs.21,000 crore for Sarva Shiksha A bhiyan. * To raise health sector allocation to 267.6 billion rupees
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