INDIA AND THE SERVICE

SUPPLY CHAIN
Brian Spath
Eeshaan Adiga
Rohit Agarwal
Santhosh Baskar

AGENDA
Overview
Gross domestic product-GDP
What is the service sector?
IT Services
BPO
Tourism
Challenges and Way Forward

OVERVIEW
The service industry forms the backbone of the
social and economic development of the
region.
Emerged as one of the the largest and fastest
growing sectors in the world.
Higher than that of agriculture and
manufacturing sectors.
The growth of services-sector GDP has been
higher than that of overall GDP between the
period FY2001- FY2014

GROSS DOMESTIC PRODUCTGDP

Gross Domestic Product(GDP) refers to the market
valve of all final goods and services produced within a
country in a given period.
GDPis often considered as an indicator of a
country'sstandard of living.
The services sector is a vital cog in the wheel of the
Indian economy. The sector, accounting for 56 per cent
of the gross domestic product (GDP), grew 5 per cent in
the FY14.

GDP BREAKDOWN BY SECTOR

WHAT IS SERVICE SECTOR?

Primary sector: It covers areas such as
farming, mining and fishing.
Secondary sector: It covers manufacturing
and making things.
Tertiary sector or Service Sector: The basic
characteristic of this sector is the production
ofservicesinstead ofend products.

INDIAS SHARE OF SERVICES

EXPORT IN THE WORLD
Indias share of services in the world exports of services, increased
from 0.6 per cent in 1990 to 1.0 % in 2000 and further to 3.3 per
cent in 2011. It has been increasing faster than any other countrys
export rate.
Since 2006, India allowed FDI in single-brand retail to the extent of
51 per cent.
The overall openness of the economy reflected by total trade
including services as a percentage of GDP shows a higher degree of
openness at 55.0 per cent in 2013-14 compared to 38.1 per cent in
2004-5.
India has the second fastest growing services sector with its
compound annual growth rate at nine per cent, just below Chinas
10.9 per cent, during the last 11-year period from 2001 to 2012.

KEY STATS

WHAT DOES THIS MEAN TO A SUPPLY CHAIN

MANAGER?

WHY IS ALL THIS HAPPENING?

Economic Affluence
Cultural Changes
Rampant Migration
Development of Markets
Economic Liberalization
Healthcare Consciousness
Booming I.T Sector

IT SERVICES

The sector has increased its contribution to India's GDP from

1.2% in 1998 to 7.5% in 2012.
Various types of IT services include
IT Hardware and Software services
IT Business Process Outsource
IT Education
Some of the Major IT Hubs of India Are Bangalore, Chennai,
Hyderabad.

IMPACT OF IT GROWTH ON GDP

IT SOFTWARE SECTOR

Growth of IT in India has been due to Outsourcing, which for

many reasons are
Large availability of Work Force.
Experienced and Trained Working force.
Process and Quality.
Affordable workforce and infrastructure facilities.
Unique geographic location.
Investor Friendly government policies.
No Language Barrier.
Some of the IT services provided are, Client Server Support,
Data Analysis, Software Development, Content and Animation
Development, Application Development, E- Commerce etc.
Off late E-Commerce boom has been the major driving force in
the growth.eg Flipkart vs Amazon.

SALARY COMPARISON, USA VS INDIA

HOW DOES THIS SECTOR

FUNCTION ?

BPO

Business Process Outsourcing , where a firm contracts a certain

process of its operations and responsibilities to a third party
service provider.
Various types of BPO are, ITES-BPO, KPO and LPO.
As of 2012, around 2.8 million people work in outsourcing sector.
Annual revenues are around $11 billion, around 1% of GDP.
What is Fueling the growth ?
Cheap and Easy access to work force who can speak fluent
English
Inroads into Rural India to expand market and same time
Reducing cost.
24hr services available.
What are the risks involved ?
Revealing classified information of the company.
No Talent retention.

MORE ABOUT BPO

Services Offered by Indian BPO include:

Customer & Tech support services
Telemarketing services
Insurance processing
Data entry, Conversion and data processing
Form processing services
Interesting facts about the Indian BPO industry
The BPO sector in India is estimated to have reached a 54 per cent
growth
The demand for Indian BPO services has been growing at an annual
growth rate of 50%
70% of India's BPO industry's revenue is from contact centers, 20%
from data entry work and the remaining 10% from information
technology related work
Indian BPOs handle 56% of the world's business process
outsourcing
Off late, India has been losing a lot of its global market share of the
BPO industry to countries like Philippines and certain eastern EU
countries.

TOURISM
Accounted for 6.6% of GDP in
2012, with expected growth of
7.9% over next decade
Price competitive
Good air and ground transport
infrastructure
Few hotel rooms per capita
Low ATM penetration

Popular attractions
Taj Mahal
Khajuraho Temple
Lotus Temple

Popular cities
Chennai
Delhi
Mumbai

MEDICAL TOURISM
In 2011, India saw 850,000 medical tourists
Industry expected to grow 20 to 30% over next five years
Most Patients from Middle East, Africa, and Asia Interest from America is
growing
Chennai known as Indias Healthcare Capital

Reasons for Medical tourism

Low costs, as low as 1/10th the cost in Europe or US

Little to no waiting period
World class facilities and specialty hospitals
Less likely to face a language barrier

MEDICAL TOURISM
Many Indian Doctors now returning back to India from the UK
and United States
Tightening salaries
Increased healthcare regulations

Steps to making medical tourism easier:

Continual removal of visa restrictions for foreign visitors
Some hospitals hiring translators to aid in facilitation of treatment
Growth of services firms dedicated to matching clients with
hospitals to suit their treatment needs

CHALLENGES
Lack of infrastructure in rural areas and some urban areas.
Though the growth of the service sector is nearly 57 %, it generates only
about 25% of the total employment.
Etiquettes and good behavior are the hallmarks of the service sector.
Indian service sector needs to focus on these areas to maximize the
potential in sectors likes banks, hotels, tourism, and hospitals.
More development needed in airports and railways in the smaller states.
Steps to reduce corruption, it projects a bad image of the country to the
world.
Finally, the service sector cannot grow alone, it needs backing of primary
and secondary sectors. Steps need to be taken to improve these sectors.

FUTURE
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 as
companies reap the benefit of outsourcing.

QUESTIONS?