Page 22 - DMGT522_SERVICES MANAGEMENT

Unit 1: Service Operation Management

12. The ....................... generation could able to cope up with that peace of change only through Notes
consumption of number of services.
13. The span of life of products and services is reducing due to the entry of .......................
products at after pace.

1.3.2 Growth of Service Sector in India

One of the key measurements of growth of the services sector is its contribution to the Gross
Domestic Product (GDP) of the country. While considering services for this purpose, there are
two important dimensions that need special attention. They are the hidden services and the
services in the unorganised sector. Hidden services are the services that are used internally by
the manufacturing organisations. The output value of such services becomes part of the output
of the tangible goods. As such the value of such services are hidden and taken as the value of
tangible goods for the purpose of ascertaining the GDP. There are large numbers of services that
are not accounted for output assessment for the purpose of GDP calculation. Personal services,
maid services and a host of professional services such as the barber, carpenter, washer man,
goldsmith, priest, and nurse, in semi-urban and rural India have their roots going back several
centuries. These services are predominant in almost all parts of the country, but a proper
accounting system to assess the value of output is conspicuously absent.

Barring these two important dimensions, the service output is valued for the purpose of GDP.
The share of the agricultural sector in the GDP of the country was 57.1 per cent in 1950-51, that is,
in the beginning of the planned era. Services occupy second position with 28.6 per cent and the
contribution of industry to the GDP was 14.3 per cent there has been a significant change in the
proportions of these three sectors by the end of 2000-01. The share of agriculture has gone down
to 24.7 percent, the services sector became the major contributor with 48.8 per cent share in the
GDP, and the contribution of industry to the GDP was 26.4 per cent. The share of service sector
is increasing year-by-year. In 2006-07, the shares of the three sectors are; Services 61.8 per cent,
Industry 19.7 per cent and Agriculture 18.5 per cent.

1.3.3 Reasons for Growth of Services in India

Several developments in the economy and society are attributable for the growth and
development of service sector in India. K. Rama Mohan Rao in his book on Services Marketing
identified the following vital factors that contributed significantly for the growth of service
sector in India:

Economic Affluence
Changing role of women
Cultural changes

IT Revolution
Development of markets
Unbundling Corporations
Increased consciousness of healthcare

Economic liberalisation
Export potential
Retail revolution

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