Service sector and its

Economics

Service?
Services are activities, benefit or
satisfaction which are offered for sale or
provided in connection with the sale of
goods

services represent either intangibles

yielding satisfaction directly
(transportation, housing) or intangibles
yielding satisfaction jointly when purchased
either with commodities or other services

Introduction
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
Indias GDP, but has also attracted significant foreign
investment flows, contributed significantly to exports as
well as provided large-scale employment.
Indias 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.

Market size
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.

Percentage contribution of different

sectors of Indian Economy over the years
Sector

1950-51

1990-91

1990-2000

Agriculture

55.4

30.9

25.5

Manufacturing

31.8

25.4

22.1

Services

12.8

43.7

52.4

Source: India Today, 2001

Growth of Service Sector

RB in I for Annual Report for the year 2000-

01 has divided the sector into few subsectors. And gave their respective
contribution in the gross domestic product
of India. As per the report, the contribution
of services sector in Indias GDP has been
Services sector
54.1%.
54.1%
Trade,
hotels,
restaurants,
transport
storage and
communicat
ion

Financing,
insurance,
real estate
and
business
services

Community,
and social
and
personal
services

Constructio
n

According toCIA Fackbooksector wise Indian GDP

composition in 2014 are as follows : Agriculture

(17.9%), Industry (24.2%) and Services (57.9%). In
Services sector, India world rank is 11 and GDP is
$1185.79 billion.
Services sector is the largest sector of India. Gross
Value Added (GVA) at current prices for Services sector
is estimated at 61.18 lakh crore INR in 2014-15.
Services sector accounts for 52.97% of total India's
GVA of 115.50 lakh crore Indian rupees. With GVA of
Rs. 34.67 lakh crore, Industry sector contributes
30.02%. While, Agriculture and allied sector shares
17.01% and GVA is around of 19.65 lakh crore INR.

Service business
characteristics
Greater intangibility
Perishability
Simultaneous production and delivery of

services
Heterogeneity
Variability in customer expectation

Service customer
classification
Services businesses use certain parameters for
classification of services customers. They
could be:Income
Gender
Customer category
Features
Age
profession

Service marketing mix

Physical evidence
Physical evidence is the environment in which the service

is delivered and where the firm and the customer interact

and any tangible component that facilitates performance
or communication of the service
Process
The actual procedure mechanism and flow of activities by

which the service is deliveredthe service delivery and

operating systems
People
All human actors who play a part in service delivery and

thus influence the buyers perceptions: namely, the firms

personnel, the customer and the customers in the service
environment.

Service Recovery
It is important to know that even if a firm
makes its service delivery as faultless and
as perfect as possible, mistakes can be
committed due to heterogeneous nature of
services.

Moving towards service

recovery
Zero-defects is an unattainable goal in
service-oriented organisations because of
ns are the rule the nature of services in
which service quality variations are the rule
rather than exception.
It has been seen that firms that recover
brilliantly from service disasters, more
often than not, have done the things that
are described below.

Cost of Effective service recovery:

Encouraging customer inputs:
Anticipate needs for recovery:
Fast and prompt action:
Training and empowering of employees
Closing the loop

Discussion