Activities in the Service Sector

1. Construction
2. Trade
3. Hotels & Restaurant
4. Transport including tourist assistance as well as activities of travel
agencies and tourist operators
5. Storage & Communication
6. Banking & Insurance
7. Real estate & ownership of dwellings
8. Business activities including accounting, software development, data
processing services, business & management consultancy, architectural
engineering and other technical consultancy, advertisement and other
business services
9. Public administration & defence
10.Other services including education, medical and health, religious and
other community services, legal services, recreation and entertainment
services
11.Personal services and activities of extraterritorial organizations and
bodies

For a standard classification of services see

http://www.wto.org/english/tratop_e/serv_e/mtn_gns_w_120_e.doc
 India’s services sector has been growing at an
annual growth rate of about 28% during the
last 5 years
 There has been rapid growth in the services
exports from the year 2002. The exports have
grown up from US $ 19.1 billion to US $ 86
billion in 2007
 India’s share in worldwide service exports is
expected to almost triple itself from current
2.3 % to 6 % by 2012, at the present annual
growth rate
 Service Tax collections are growing very
rapidly
 41. Erection,commi. &
21. Cleaning instal.
22. Clearing & Forwdg 42. Event Management
1. Advertising Agency Agents 43. Fashion Designer
2. Advtertising Space or Time23. Club’s membership 44. Fax
3. Air Travel Agent 24. Commer. Train. or 45. Forward Contract
4. Air Travel for inter. Jny Coach. 46. Franchise
5. Airport 25. Company Secretary 47. General insurance
6. Architect Business
7. Asset management 26. Const. Of Resi. 48. Health Club & Fitness
8. ATM operations Complex 49. Hospital or Clinic
9. Auction 27. Const. Of Commer, service
10. Authorised Service Station civil 50. Insurance Auxiliary
11. Banking & other financial 28. Consulting 51. Intellectual Property
12. Beauty treatment Engineering 52. Interior Decorator
13. Brand Promotion 29. Containers by Rail 53. Information Tech.
14. Broadcasting (Radio& TV) 30. Convention Software
15. Business Auxiliary 54. Internet Café
31. Cosmetic or Plastic 55. Internet Telephony
16. Business Exhibition
17. Business Support surgery 56. Leased Circuit
18. Cable Operator 32. Cost Accountant 57. Legal Consul. or
19. Cargo Handling 33. Courier assistance
20. Chartered Accountants 34. Credit Card related 58. Life Insurance
35. Credit Rating Agency 59. Mailing list compilation
60. Maint. of Medical
36. Custom House Agent Records
37. Design
38. Develop. & sply of
61. Maintenance or repair
62. Management Consultants 81. Recog. or a Reg.association
63. Management of Investment 82. Recogd. stock exchange. 101. Telecommunication
64. Manpower Recruit. Supply 83. Registrar to an issue ser. 102. Telegraph
65. Market Research 84. Rent a cab operator 103. Telephone
66. Mining of mineral, oil or 85. Right for comm. 104. Telex
gas exploitation 105. Temporary transfer
67. Opinion Poll 86. Renting of immovable 106. Test, Insp., Certification
68. Organizing games of prop. 107. Tour Operator
chance 87. Scientific & Tech. Consult. 108. Transport of coastal
69. Outdoor Catering 88. Security Agency goods
70. Packaging 89. Services of electricity exch.
109. Transp. of Goods by air
71. Pager 90. Share Transfer Agent
110. Transp. of Goods by
72. Pandal or Shamiana 91. Ship Management
92. Site Prepar. & Clearance
pipeline
73. Photography 111. Transp. of Goods by
74. Port Services by ports 93. Sound Recording
94. Sponsorship road
75. Preferential devel. of
95. Steamer Agent 112. Travel Agents
complex
96. Stock Broking 113. Travel by cruise ships
76. Processing and
clearinghouse 97. Storage & warehouse 114. TV / radio prog. Prod.
77. Public Relation 98. Supply of tangible goods 115. Underwriter
78. Rail Travel Agent 99. Survey & Explor. of mineral116. Video Tape Production
79. Real Estate Agent 100. Survey and Map making 117. Works Contract
80. Recovery Agent
 Intangibility: Services are performances, ideas
& actions rather than objects, therefore
having poor tangibility

 Services inspired the “Just –in- time”:

Production and provision of services starts as soon
as the customer arrives to avail it. Pull system

 Services are more people centric : Due to more

laboure intensive nature, personalized services.
 Capacity
◦ Notion & strategy
 Supply Chain
◦ Does it exist?
 Quality
◦ Challenges in Performance
 Pricing
◦ Traditional Product based Economics do not cover
much ground
 Design of Service Delivery
◦ Layout & related issues
 Degree of Interaction & Customization
Low High
Low

Service Factory Service Shop

(Low labour/low (Low labour/high
Interaction &
Degree of Labour Intensity

Interaction &
Customisation) Customisation)

Mass Service Professional Service

(High labour/low (High labour/high
Interaction & Interaction &
Customisation) Customisation)

High

Source: Schmenner, (1986), “How can service businesses survive & prosper”, Sloan Management
Review
 High Low

F2F
Customised

Production Efficiency
F2F
Sales Opportunity

Loose Specs
F2F
Tight Specs
Phone
Contact
On-site
Technology
Mail
Contact

Degree of Customer Contact High

Low
Source: Chase, R.B. and Aquilano, N.J., (1995), Production & Operations Management, 7th Edition, pp 113.
 Design of service delivery system is not a
peripheral activity in SCM
◦ Choice of service networks, logistics planning, manning
the supply chain etc.
 Reach is an important parameter for SCM
performance; Chain will be resource (manpower)
intensive
 Implications for scaleability & choices
 One more critical SCM design element is the level
of Decentralisation; Service firms generally
require more decentralisation
 How to set up associated controls?
 Intangibility
◦ Performances rather objects, therefore precise specs. can be rarely set
◦ Cannot be counted, measured, inventoried, tested & verified in
advance to assure quality
◦ Difficult to understand how consumers perceive & evaluate their
services
 Heterogeneity
◦ Performance vary from producer to producer, consumer to consumer
◦ Consistency of behaviour from service personnel is difficult to assure
◦ What firms intend to deliver may be different from what the consumer
receives
 Simultaneity
◦ Not engineered in a plant and then delivered in tact to the consumer
◦ Quality occurs during service delivery while the consumer interacts
with the service personnel
◦ Consumers’ input may be critical to quality
◦ The service firm may have less managerial control in real time
 Service quality is
◦ A measure of how well the service delivered
matches with expectations
◦ Pre-dominantly is a function of perceptions of the
customers
 Quality evaluations are
◦ Not made solely on the outcome of the service
◦ They also involve evaluation of the process of
delivery
 Expected Service

Gap 5

Perceived Service
Consumer

Firm External Communications

Service Delivery
to Consumers
Gap 4
Gap 3
Translation of perceptions
into Service Qlty. Specs.
Gap 1
Gap 2
Management perceptions of
Consumer Expectations
Source: Parasuraman, A., Zeithhaml, V.A. and Berry, L.L., (1985), “A conceptual model of
service quality & its implications for future research”, Journal of Marketing, 49 (4), 41 – 50.
 Gap 1: Service firm executives may not always understand
◦ What the consumer wants?
◦ What features a service must have?
◦ What levels of performance?
 Gap 2: Means to meet the expectations absent
◦ Knowledge of consumer expectations exist but not the perceived
means to deliver
◦ Absence of management commitment to quality
 Gap 3: Variability in employee performance
 Gap 4: Problems arising out of communication
◦ Firms tend to promise more in communications than what they
deliver in reality
◦ Firms tend to neglect to inform consumers of special efforts to
assure quality that are not visible to consumers
 Gap 5 = f (Gap 1, Gap 2, Gap 3, Gap 4)