Page 37 - DMGT522_SERVICES MANAGEMENT

Services Management

Notes The software services in Indian economy along with the export of products is growing at a
massive pace and thereby witnessed an alarming rise of 35.5 percent and reached a lump sum
amount of USD 18 billion. The ITeS and BPO sectors grew by 33.5 percent and earned revenue of
USD 8.4 billion. The service sector of Indian economy has been the most high-powered sector in
India’s economy. It has also been focusing in various investments of late. As Indian economy is
looking forward for more liberalisation, sectors like banking are on its way to loom large and
occupy a more significant position in India’s economy.

Caselet Case: Myths about Service Industries

here are certain myths about services sector. It is because of these myths that people
Tare unable to relate the role and contribution of the services sector in the economy.
The first myth is that a service economy produces services at the expense of other sectors.
The fact is that many service industries are major purchasers of manufactured goods. Take
the example of airlines, fast food outlets, educational institutions, etc. which buy so much
of manufactured products.
The second myth is that service production is primarily labor intensive. In fact, a number
of service sectors like healthcare, hospitality, etc. are capital intensive. Productivity are
therefore equally important in service organisations as returns on capital employed will
be one of the major determinants of success.
The third myth about services is that people satisfy their product needs before the need for
services. This is also not true. Research findings of a study revealed that people value
services as much as products; however, they may buy services in a less cyclical way, as
compared to goods. The fourth myth about the services sector is that service businesses
are ‘cottage industries’ and service jobs are low paying. If you check the list of Fortune 500
companies you will be surprised to see the number of service companies figuring in this
list.
The other myth about the service sector is that services are only offered by the government
sector. The fact is that on the one hand public services, like telephones, health care, power
generation and distribution, etc. are being privatised and on the other hand large enterprises
are entering into services sector. Take the example of Escorts into health care, Tata’s in
power distribution, etc. In fact the service organisations are quite varied and different
from each other.
First category includes the public agency sector for example post offices, police and fire
departments, water and electricity authorities, etc. The second group is made up of the
private non-profit sector running charities, foundations, old age homes or various societies
involved in issues related to women, literacy, family welfare, etc. Next comes the business
sector comprising banks, hotels, airlines, travel agencies, tour operators, courier services,
insurance, consultancy – legal management or medical. Lastly, it is the sector which provides
services to those involved in manufacturing. This includes those firms providing security
personnel, accountants and auditors, computer operators and software consultants which
help manufacturing firms in their operations.

In addition, there are a number of other types of services which are emerging in the
western society. These range from, on a charge, the availability of a baby sitter to a group
of hippies making the party colorful. In India also such services are emerging whether
they are a troupe of young boys and girls doing a music-cum-dance show on a birthday or
wedding, house maintenance services, real estate brokers, security, etc.

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