India Services Sector

While Europe doesn't have a strong system for offering financial services, China needs a stronger domestic services industry to create jobs and help its economy move out of deflation

This piece explores the implications of one of these profiles - formal versus informal employment

India's services PMI rose to 60.5 in July, the highest in 11 months, led by strong international sales, new orders and demand from Asia, Europe and the US

Composite PMI Output Index rose to 61.1 in July from 61.0 in June, its fastest pace since April 2024; but hiring growth weakens

Services employment creation has been robust in FY25 amid concern over impact of artificial intelligence

Companies report 'faster expansion' in employment to meet increased demand

Despite AI agents and chatbots increasingly becoming a part and parcel of customer service, they have yet to significantly reduce customer service wait times, with a report revealing that Indian consumers spent over 15 billion hours last year waiting to lodge customer service complaints. The ServiceNow Customer Experience report analysed the widening gap between rising customer expectations and the reality of service delivery. It surveyed 5,000 Indian consumers and 204 Indian customer service agents. As many as 80 per cent of Indian consumers now rely on AI chatbots for essential services like checking complaint statuses and product recommendations. Yet, these same consumers collectively spend an astounding 15 billion hours on hold each year, according to the report. "While some headway has been made-- the average Indian spent 3.2 hours less time waiting for an issue to be resolved than the previous year--there is still a considerable gap between customer expectations and service ..

Salary increments are also projected to vary across industries with engineering design services and auto/vehicle manufacturing budgeting for the highest pay increases

Business confidence leads to 'hiring surge' as input costs rise to the 'greatest extent' in 15 months

For more than three years, the index has stayed above the 50-mark separating expansion from contraction

The survey also noted that pace of job creation was at its strongest in over 18 years

The headline Purchasing Managers' Index (PMI) figure, released by HSBC, slid to 60.8 in April from 61.2 recorded in March

HSBC Bank survey says 'buoyant demand' led to a 'cascade of positivity for the sector'

Grew 16% over a year earlier; current account deficit likely to reduce

Data released by the government last month showed services exports in October were $28.70 billion, while imports were $14.32 billion

India needs to focus on the manufacturing sector to achieve sustained growth of 7-7.5 per cent until 2030, Chief Economic Advisor V Anantha Nageswaran said. In an S&P Global report titled 'Look Forward: India's Moment', Nageswaran said that manufacturing should be a key growth area given the country's comparative advantage in terms of skilled labour, improved physical infrastructure, well-established industrial ecosystem and large domestic market. As regards the services sector, he said the composition should change in favour of high value added services as this would improve earnings by attracting foreign demand. "The Indian economy, in real terms, needs to grow annually at 7-7.5 per cent until 2030... The share of manufacturing in total gross value added has to increase from 16 per cent at present to at least 25 per cent of GDP at the expense of agriculture and low value added services," Nageswaran said. He further said the investment rate (gross fixed capital formation/GDP) ...

India's headline figure has been in the expansion zone for 23 months straight since August 2021

However, the survey itself may not come up before the end of 2024

The rise in credit was largely driven by housing and vehicle loans segments

The hiring boom in India's services sector is likely to continue in the third quarter, with 73 per cent of employers willing to increase their resource pool