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Sector Rough Data

The Indian service sector, a key contributor to the economy, is projected to reach a market size of US$ 19.93 billion by 2025, accounting for 66% of GDP and generating 28% of employment. The government is actively promoting growth through various initiatives in healthcare, IT, and telecommunications, with significant budget allocations aimed at enhancing infrastructure and innovation. Key players in the sector include HDFC Bank, Tata Consultancy Services, and Bharti Airtel, while emerging technologies like AI, blockchain, and data science are driving recent developments.

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27 views6 pages

Sector Rough Data

The Indian service sector, a key contributor to the economy, is projected to reach a market size of US$ 19.93 billion by 2025, accounting for 66% of GDP and generating 28% of employment. The government is actively promoting growth through various initiatives in healthcare, IT, and telecommunications, with significant budget allocations aimed at enhancing infrastructure and innovation. Key players in the sector include HDFC Bank, Tata Consultancy Services, and Bharti Airtel, while emerging technologies like AI, blockchain, and data science are driving recent developments.

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INTRODUCTION

The service sector encompasses a wide range of industries that provide intangible goods and
services, including healthcare, education, finance, and hospitality, playing a crucial role in
modern economies.

OVERVIEW
The indian Service sector is broadly divided into Sub-sectors

Hospitality and Healthcare

Trade and Transport Services

Financial, Insurance, Real Estate and Business Services

Public Administration, Defence and Other Services

MARKET SIZE
The services industry performed well in H2:2022-23, boosted by contact-intensive
services and building activities. India ‘s IT and business services market is projected to
reach US$ 19.93 billion by 2025.
With the fastest growing (9.2%) service sector globally, the sector accounts for a 66%
share of India's GDP and generates about 28% of the total employment in India.

LEADING PLAYERS
Domestic
1) HDFC Bank
2) Tata Consultancy Services
3) Bharti Airtel
4) Reliance Industrie

International

1) Accenture
2) Amazon
3) Meta
4) IBM
TOP 3 SERVICE COMPANY IN INDIA
1) HDFC Bank
2) Tata Consultancy Services
3) Bharti Airtel

MICHAEL PORTERS FIVE FORCES MODEL

1) Threat of New Entrants


Moderate due to high capital requirements and established players that create
significant entry barriers.

2) Bargaining Power of Suppliers


Low; the abundance of suppliers in the service industry diminishes their
influence over pricing.

3) Bargaining Power of Buyers


High; clients increasingly demand customization and superior quality,
pushing firms to adapt.

4) Threat of Substitute Products


Moderate; the service sector faces competition from various alternative
service providers.

5) Industry Rivalry
High; intense competition among leading firms fosters continuous innovation and
service improvement.

GOVERNMENT INITIATIVES
The Government of India recognises the importance of promoting growth in the services
sector and provides several incentives across a wide variety of sectors like health care,
tourism, education, engineering, communications, transportation, information technology,
banking, finance, and management among others.
 In October 2021, the government launched phase II of the Mahatma Gandhi National Fellowship
to empower students and boost skill development.

 In October 2021, the PM Ayushman Bharat Health Infrastructure Mission was launched by the
government, to strengthen the critical healthcare network across India in the next four to five
years.

 Under the Union Budget 2021-22, the government allocated Rs. 7,000 crore (US$ 963.97 million)
to the BharatNet programme to boost digital connectivity across India.

 India’s tourism and hospitality sector may earn US$ 50.9 billion as visitor exports by 2028.

Government Initiatives to Promote the IT and ITeS Sector in India

This document outlines the significant initiatives undertaken by the Indian government to
foster growth in the Information Technology (IT) and Information Technology-enabled
Services (ITeS) sector. With a focus on enhancing infrastructure, promoting innovation, and
ensuring cybersecurity, these initiatives reflect the government's commitment to making India
a global leader in the IT and ITeS domains. The following sections detail various budget
allocations, policy changes, and collaborative efforts aimed at strengthening the IT ecosystem
in the country.

Key Initiatives
1. Union Budget 2024-25 Allocation
The Union Budget presented by Finance Minister Nirmala Sitharaman on July 23,
2024, proposed an allocation of Rs. 1,16,342 crore (US$ 13.98 billion) specifically for
the IT and Telecom sectors.

2. IndiaAI Mission Funding


In March 2024, the Cabinet approved an allocation of over Rs. 10,300 crore (US$ 1.2
billion) for the IndiaAI Mission, marking a significant step towards enhancing India’s
AI ecosystem.
3. Focus on Emerging Technologies
The government is prioritizing advancements in cybersecurity, hyper-scale
computing, AI, and blockchain technologies. With data costs at Rs. 10/GB
($0.12/GB), India is recognized as one of the most affordable countries for data
access.

4. PLI Scheme – 2.0 for IT Hardware


The Cabinet approved the Production-Linked Incentive (PLI) Scheme – 2.0 for IT
Hardware with a budgetary outlay of Rs. 17,000 crore (US$ 2.06 billion).

5. Telecommunications Bill 2022


In September 2022, the Ministry of Communications published the new
Telecommunications Bill 2022 for public consultation, aiming to create a modern
telecom framework in India.

6. Cyber Security Exercise


In August 2022, the Indian Computer Emergency Response Team (CERT-In), in
collaboration with the Cyber Security Agency of Singapore (CSA), successfully
conducted the "Synergy" Cyber Security Exercise for 13 countries to enhance
network resilience against ransomware attacks.

7. Export Growth through STPI


In June 2022, STPI Director General Mr. Arvind Kumar reported that exports through
STPI units surged from Rs. 17 crore (US$ 2.14 million) in 1992 to Rs. 5.69 lakh crore
(US$ 71.65 billion) in 2022.

8. DigiLocker Services via WhatsApp


In May 2022, it was announced that Indians could access their DigiLocker services
through WhatsApp, facilitating easy access to official documents.

9. Cybersecurity Directions
In April 2022, CERT-In issued directives aimed at strengthening cybersecurity
measures across the country.

10. STP Scheme Introduction


The government introduced the Software Technology Parks (STP) Scheme, a 100%
export-oriented initiative for the development and export of computer software and
professional services.

11. Internet Exchange Launch


In November 2021, the government launched the Internet Exchange in Uttarakhand to
improve the quality of internet services in the state.

12. MoUs for Emerging Technology in Karnataka


The Karnataka government signed three Memoranda of Understanding (MoUs) worth
Rs. 100.52 crore (US$ 13.4 million) to support the state's emerging technology sector.

13. Cyber Lab for Capacity Building


In September 2021, the Indian government announced plans to establish a cyber-lab
for the ‘Online Capacity Building Programme on Crime Investigation, Cyber Law,
and Digital Forensics’ to enhance cybersecurity capabilities.

14. Connecting All Indians Workshop


The Ministry of Electronics and Information Technology (MeitY) organized a
workshop in September 2021 under the theme ‘Connecting all Indians’ to promote
internet access in remote areas.

15. Meghalaya Enterprise Architecture Project


Launched in September 2021, the Meghalaya Enterprise Architecture Project
(MeghEA) aims to improve service delivery and governance in the state through
digital technologies.

16. Phase II of the Visvesvaraya PhD Scheme


In September 2021, the government launched Phase II of the Visvesvaraya PhD
Scheme to encourage research in emerging technologies within IT and ITeS.

17. NIELIT Centres Inauguration


In September 2021, five National Institute of Electronics & Information Technology
(NIELIT) Centres were inaugurated in three Northeastern states to enhance training
and employment opportunities.

18. Technology Innovation Platforms


On July 2, 2021, the Ministry of Heavy Industries and Public Enterprises launched six
technology innovation platforms to develop competitive manufacturing technologies
in India.

19. MoU with Japan for Telecom Cooperation


The Department of Telecom, Government of India, and the Ministry of
Communications, Government of Japan, signed an MoU to enhance cooperation in
5G technologies, telecom security, and submarine optical fibre cable systems.

These initiatives collectively aim to create a robust IT and ITeS ecosystem in India, driving
innovation, enhancing security, and promoting sustainable growth in the sector.

Employment Trends
Direct employment in the IT services and BPO/ITeS segment is estimated to reach 5.43 million
in FY 2023-2024 (E) with an addition of 60,000 people (consisting of ~ 36 percent women
employees).
Recent Development
Cloud migration
Businesses are moving their IT infrastructure and services to cloud-based platforms to reduce
costs, increase flexibility, and use scalable computing resources.
Cybersecurity
The emphasis on cybersecurity is growing, with tools that can be integrated with other security
tools to speed up risk reduction.
Data science
Data science is a growing field with applications across many sectors, including healthcare, finance,
and e-commerce.
Artificial intelligence (AI)
AI is being used in a variety of ways, such as in Domino's ordering system, where a virtual assistant
named "Dom" can process voice orders and answer questions.
Blockchain
Blockchain is increasing the security, transparency, and efficiency of transactions and record-
keeping.
Robotics and IoT
Robotics and IoT devices are being used to streamline operations and improve service delivery
through automation and real-time data collection.
AR and VR
AR and VR technologies are being used to create immersive interactions that improve customer
experiences.
Predictive analytics and big data
Predictive analytics and big data are being used to provide insights into consumer behavior, which
can enable personalized services.

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