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Services Management

Notes international arbitration. Union Budget 2011-12 has expanded the scope of legal services for
service tax to include services provided by business entities to individuals as well as
representational and arbitration services by individuals to business entities. However, no tax is
levied on services provided by individuals to other individuals.

2.5.8 Consultancy Services

Consultancy services are emerging as one of the main business areas in India. The volume of
revenue in the Indian consulting industry on conservative basis has been estimated at around
US$ 8.24 billion in 2010-11. Presently, it contributes to about 0.47 per cent of the GDP. The
growth rates of the industry over the last few years have been extremely promising and revenue
is projected to increase to US$ 9.89 billion by 2012 at a growth rate of 20 per cent. Consulting
service providers in India may be classified into five categories: individual consultants, consulting
firms, R&D organisations, academic institutes and professional bodies. The client sectors to
which consulting services are provided at present include agriculture and rural development,
banking and financial services, construction, education, energy, environment, governance and
public administration, health and demography, infrastructure, information technology, law
and regulation, life sciences, manufacturing, management, science and technology,
telecommunications, tourism, transport, urban development, and water management.

The consultancy services market can be broadly categorised into engineering and management
consultancy. The Indian management consultancy market is still in its nascent stage, with high
growth and large entry of players. The revenue size of the Indian management consultancy
market on conservative basis was estimated at around US$ 2.5 billion to US$ 3 billion in 2010-11.
Although it is still relatively small in revenue size as compared to the global management
consultancy market, the Indian management consultancy industry has witnessed high growth
partly due to the low base from which it picked up. As per the estimates available for 2006-07, it
comprised around 2,500 individuals and 22,300 firms. The Indian engineering consultancy market
which is a more developed market as compared to the management consultancy market is
experiencing a boom, with many large-scale development projects driving its growth. The
revenue size of the Indian engineering consultancy market on conservative basis was estimated
to be around US$ 5.5 billion to US$ 6 billion in 2010-11. Although it is still relatively small as
compared to the global engineering consultancy market, the Indian engineering consultancy
industry has shown steady growth over the last few years. As per estimates available for 2006-
07, it comprised around 7,000 individuals and 25,600 firms. India’s emergence as one of the
fastest growing consultancy markets in the world has been facilitated by the liberalisation of
FDI policy, entry of many new players, high growth in most key sectors, and India being a low
cost sourcing destination.
Though the growth of the Indian consulting industry has been robust in the last few years, there
is need to address certain issues to position it on the world map as well as to increase its global
market share. These include availability of experienced consulting professionals, improvement
in quality, proper training and development, international experience for Indian consultants on
consulting assignments, and market intelligence on consulting opportunities abroad. The
government has taken certain initiatives to address these issues. These include the Marketing
Development Assistance and Market Access Initiative Schemes by the Department of Commerce,
Guidelines for Selection of Consultants by Ministry of Finance, and certain export-promotion
initiatives taken by the Federation of Indian Export Organisations.

2.5.9 Construction Services

The construction industry in India is an important indicator of growth and development as it
creates investment opportunities and increases production capacity across various related sectors.

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