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November, 2012

Indian Services Sector: Brief Overview

The services sector contributes about 55 per cent to India's gross domestic product (GDP). The acceleration in services is majorly driven by domestic demand wherein a buoyant rural sector is given a major impetus. HSBC believes that growth in the services sector would sustain on the back of rising demand in domestic economy and the positive sentiment effects from the recent policy reforms undertaken by the Government.

Terry Endsor, Head of Human Resources, Asia Pacific, Citi, states that India is a trading and services-oriented nation. Rising income levels, higher exposure to international culture and greater awareness for education are certain factors that are bringing a paradigm shift in the economy from being an agriculture-base to service-base.

Key Statistics

  • Services sector activity intensified in September 2012 on the back of rise in new business and a pick-up in employment. A recent release from global financial services major HSBC has given India's Purchasing Managers Index (PMI) wherein service sector scored 55.8 points in September against 55 points in August 2012. New business flows increased in September, at 56.7 points compared to 55.9 in August 2012
  • Services exports stood at US$ 11.94 billion in September 2012, 6.3 per cent higher than US$ 11.23 billion of services exports reported in September 2011, according to the data released by the Reserve Bank of India. During April-September 2012-13, the cumulative services exports amounted to US$ 67.74 billion

Recent Investments/ Developments

  • Thiruvananthapuram-based provider of real-time closed-loop mobile marketing solutions Flytxt, has won two deals with African telecom companies Warid Uganda and Warid Congo B wherein the firm will provide its campaign management solution to the latter. As soon as the deals were closed, Flytxt's platform went live on both the operators' networks. The technology collects and integrates subscriber insights based on service consumption trends and helps cellular service providers to customise service offerings based on the findings
  • India's second largest private bank HDFC Bank has opened its first representative office in Abu Dhabi to render financial services to a large customer base of non-resident Indians (NRIs) staying in the UAE. The new office will help NRIs open accounts in India and will also offer remittance services, fixed deposits and other related banking services
  • Genpact , the business process outsourcing (BPO) services provider has been awarded a contract from Diageo , the world's biggest distiller to provide the latter financial and accounting (F&A) processing services, by establishing a near-shore shared services centre. As a part of the agreement, for which financial details are not known, Genpact has set up a shared services centre in Bogota, the capital of Colombia , where the employees of both the companies will work together
  • In a bid to strengthen its position towards becoming a crucial information technology (IT) services player in the global Travel and Transport markets, NIIT Technologies has signed an agreement to acquire Sabre Holdings' Philippines Development Centre in Manila. NIIT would provide BPO services to Sabre and its other customers in the region.
    Sabre is a global technology company that serves solutions for the travel industry and also a key customer of NIIT Technologies
  • DHL's division DHL Supply Chain has decided to invest more than Rs 680 crore (US$ 122.08 million) in its Indian operations as a part of its expansion spree. The company will infuse capital to develop an additional 5 million square feet of warehousing space and eight world class multi-client sites across India. It will also invest in improving its transportation business. Paul Graham, CEO, Asia Pacific, DHL Supply Chain, has stated that the company is enthusiastic about the fast growth in Indian logistics market with government investments in infrastructure on the rise coupled with streamlining of regulatory policies
  • World's largest online payments company, PayPal, is all ready to take off in India and hopes to strike chords with the burgeoning Indian internet users who shop on the internet. With the regulators' approvals, PayPal plans to launch a point-of-sale application in India, which will allow online shoppers to use their debit and credit cards to make transactions on their phones. Paypal is a subsidiary of online market place eBay