Introduction to Services

and Service Operations

Hemant Jog
Current Status – GDP % of various sectors in India
• The services sector is the largest sector
of India.
•Gross Value Added (GVA) at current
prices for the services sector is
estimated at 96.54 lakh crore INR(20-21)
The services sector accounts for 53.89%
of total India's GVA of 179.15 lakh crore.
With GVA of Rs. 46.44 lakh crore,
Industry sector contributes 25.92%.
While Agriculture and allied sector share
20.19%.
 Role of Services in an Economy
FINANCIAL SERVICES INFRASTRUCTURE SERVICE
· Financing · Communications
· Leasing · Transportation
· Insurance · Utilities
· Banking

PERSONAL SERVICES
MANUFACTURING · Healthcare
Services inside company: · Restaurants
· Finance DISTRIBUTION · Hotels
· Accounting SERVICES
· Legal · Wholesaling
· R&D and design · Retailing
· Repairing CONSUMER
(Self-service)

BUSINESS SERVICES
· Consulting GOVERNMENT SERVICES
· Auditing · Military
· Advertising · Education
· Waste disposal · Judicial
· Police and fire protection
 Key Operations Principles
 Aggregation Principle
 The higher the level of aggregation of resources and
information, the more predictable operations becomes (e.g.
forecasts of total resources needed tend to be more
accurate than forecasts of individual resources). This is a
manifestation of the Central Limit Theorem.
 Uncertainty Principle
 The more uncertainty in operations, the greater the need to
employ extra resources to cope with this uncertainty.
Alternatively, the greater the stability and predictability, the
more efficiently operations can function.
 Efficiency Principle
 All else being equal, operations should function as
efficiently as possible.
 Distinctive Characteristics of Services
 Customer participation in the service process: attention to
facility design, opportunities for co-production, concern for
customer and employee behavior
 Simultaneity: process and outcomes are coupled, customer-
facing activities cannot be inventoried, increased importance of
matching capacity to demand
 Perishability: opportunity loss of idle capacity, capacity
utilization is a significant managerial challenge due to variable
customer demand and lack of inventory for absorbing fluctuations
 Intangibility: customers cannot assess quality a priori,
importance of reputation
 Heterogeneity: customer involvement in delivery process
results in variation in service from customer to customer
Compared to manufacturing, these characteristics introduce more
uncertainty into the operating system with fewer options for
managing uncertainty and create an operational focus on managing
the customer experience throughout the service delivery process.
© Oxford University Press 2007. All
rights reserved. 7
 Gap in SERVQUAL
 Gap 1
 Insufficient marketing research
 Poorly interpreted information about audience’s expectations
 Research not focussed on demand quality
 Too many layers between front line personnel and top level
management
• Gap 2
 Insufficient planning procedure
 Lack of management commitment
 Unclear or ambiguous service design
 Unsystematic new service development process
• Gap 3
• Ineffective internal marketing
• Failure to match demand and supply
• Lack of proper customer education and training
• Deficiencies in human resource policies such as ineffective recruitment,
role ambiguity, role conflict, improper evaluation and compensation
system 8
 Gap in SERVQUAL
 Gap 4
 Over promising in external communication campaign
 Failure to manage customer expectation
 Failure to perform as per specifications
• Gap 5
 Is the product of gaps 1, 2, 3, 4. These separate the customers from the
company. If they are closed 5th gap also is closed.