services is the fastest growing sector in India, contributing significantly to GDP, GDP growth, employment, trade and investment.

Labour productivity in services is the highest and it has increased overtime. India is a major proponent of liberalizing services both in the !" and in its bilateral trade agreements. #owever, there are some concerns. $conomic growth has slowed down. Growth in employment in services has not been commensurate with the share of the sector in GDP. % large part of the employment is in the non&corporate or unorganised sector, with limited job security. %lthough India is portrayed as a major e'porter of services, its ran( among !" member countries in services e'ports is lower than that of )hina*s and its e'port competitiveness concentrate in few sectors and a few mar(ets. 1) Higher Percentage of GDP: !oday, the service sector contributes more than +, percent to India-s GDP. !his is a far cry from the situation a few decades bac(, when India was basically an agricultural economy. !his shift from manufacturing and agriculture to services is being witnessed in countries all over the world, with the increasing prominence of services in the global economy, .ervices. .ervice economy can refer to one or both of two recent economic developments. "ne is the increased importance of the service in industrialized economies. .ervices account for a higher percentage of GDP than /, years ago. !he current list of 0ortune +,, companies contains more service companies and fewer manufacturers than in previous decades. India*s trade in services have increased overtime and services accounts for the largest share in India*s foreign direct investment 10DI2 inflows and outflows. India is among the fast growing economies in the world. .ervices sector has been a major contributor to India*s GDP and growth 13hattacharya and 4itra 566,2. It is the second largest employer after agriculture. /2 Increasing Share in Trade and Investment: !he growth of India*s services sector, its contribution to GDP, and its increasing share in trade and investment has drawn global attention. 7nli(e other countries, where economic growth has led to a shift from agriculture to industries, in India, there has been a shift from agriculture to the services sector. In this respect, some economists consider India as an outlier among .outh %sian countries and other emerging mar(ets. )ontending this view, some economist pointed out that India is not an outlier as the share of services sector in GDP has increased with rise in per capita income. 8ochhar et. al. /,,9 argued that India was a negative outlier in 56:5 compared to other emerging mar(ets as the share of services in value added and employment was below that of other countries. 3) Change in Demand Pattern :

!he liberalisation and reforms is one of the important factors contributing to the growth of services sector in India. ith economic growth and rise in per capita income, there is a change in demand pattern from necessary to discretionary consumptions li(e education and personal and health care service. #igh income elasticity of demand for services has contributed to the high growth of this sector. !echnological progress and availability of high s(illed manpower has led to growth of services li(e information technology 1I!2 and I! enabled services 1I!e.2. Developed countries outsource its services to developing countries li(e India leading to a rise in demand for services from the developing mar(et. #igh government e'penditure on certain services li(e community, social and personal services has also led to high growth of services. 4) Slow Pace of m!lo"ment Growth in Services Sector: "verall, services sector employment in India is low compared to its share in GDP, but it is growing. .ervices sector has the largest share of employment within the total organised sector employment, but within services, share of organised sector employment is small. ithin the organised services sector, public sector dominates the employment in services and thus private sector has not been very successful in creating organised services sector employment. #) Change in the Pattern of m!lo"ment within the Services Sector : "ver the years, the percentage of people employed in agriculture has declined and employment in services has increased, though the broad pattern of employment has remained the same with agriculture having the highest share. !here has been a change in the pattern of employment within the services sector. holesale and retail trade account for a substantial part of services sector employment and its share is rising. !he share of transport, storage and communication is also increasing. $) nhanced Glo%al Com!etiveness : India enjoys global competiveness in I! and I!e. services, which has increased services* e'ports manifolds. !he demand for India*s services e'ports in global mar(et has led to an increase in India*s trade surplus in this segment. .ervices e'ports have contributed to inclusive economic growth by increasing the number of well&paid jobs and by reallocating labour to a high&productivity sector. .ervices e'ports have also increased ta' revenues and stimulated domestic demand, including demand for infrastructure. &) 'oc(s on Information Technolog")

"ne of the best contributions of technology is information. !echnological advances led to the availability of information in all sectors of the organization. $'amples of information are consumer*s purchasing behavior, consumer*s consumption pattern, consumer*s data information and so on. Information made the decision ma(ing process of top e'ecutives easy and later resulted to further innovation and improvement on the company*s strategic direction. )ompanies who failed to use information also failed to understand their customers. *) 'oc(s on Glo%ali+ation) Globalization has swept companies from all over the world by storm. Local mar(ets are already saturated by local players and the best way to e'pand their sales is to tap emerging international mar(ets. #owever, internationalization approach is not as simple as transporting your service to another country. If your company*s service model is effective in your local mar(et, it is not a guarantee that it will also be effective in other countries. )ulture, social behavior, and customs of the foreign country must always be ta(en into account. 4any companies who jumped in the globalization band wagon failed to adjust their service approach when setting&up a foreign franchise. In the fast&food industry for instance, 4) Donald*s beef burger may not be a hit in countries li(e India because cows are sacred in this country. .ome %merican fast&food chains that established franchise in the 4iddle $ast or some parts of %sia changed the ingredients of their food products and modify the service orientation of their staff in order to adapt to the taste and customs of the locals. ,) Share in -orld Trade in Services has Increased: India*s share in world trade in services has increased from less than one percent to over ;< between 56:, and /,5,, while it share in goods trade remained constant at one per cent during the same period. hile the world*s trade in services is still dominated by the !" member countries. In /,55, India was the developed countries, emerging economies li(e )hina and India are now among the top ten e'porters and importers of services among was the fourth largest e'porter of services. eighth largest e'porter and seventh largest importer of services. /; )omparatively, )hina