Charting a New Path to Make India’s Services Sector Self-Reliant

The services sector is the lifeline for socio-economic growth of any country in the world. If you look at different countries, Services is the largest and fastest growing sector globally. Moreover, in alignment with this rising global trend, the Indian Services sector has also witnessed major growth. It is now considered the biggest contributorto both employment and national income, having added a whopping 55.39 percent to India’s Gross Value Added at current price in FY20.

Despite the growing evidence of Services forming the backbone of our country, the talk about making India self-reliant almost always focuses on manufacturing. We continue to believe that only manufacturing helps grow and sustain a higher standard of living for our nation. Plus, the higher wages of manufacturing jobs contribute to a better quality of life, which further perpetuates this notion.

Even when the Coronavirus pandemic came at us, India’s key services industries were the first to be hit. Despite that, incentives for survival were only reserved for manufacturing, while the services sector was left to fend for itself. But if we have to battle similar crises in the future, and ensure continued growth of our economy, it is time we put the spotlight on the services sector, making it self-reliant for the sake of India’s development.

Renewed focus on skilling

In order to make the services sector more self-reliant, it needs to be viewed as a serious and crucial cog in the bigger economic wheel of the country. The sector relies heavily on customer engagement – right from travel and tourism, to hospitality, to financial services, and more, quality of engagement is key to success. And yet, the quality of manpower in this sector continues to remain abysmal, to say the least.

The primary image (and reality) of employment in the services sector is that of it being performed by unskilled and untrained people, which gives way to new patterns, particularly in terms of alignment of wage, salary and working standards, with those in the manufacturing sector. The primary relationship in this sector, however, is not with a product, but with a person. The quality of the service in terms of the user's acceptance and benefits becomes of primary importance then, and will determine the effectiveness of the service as well.

Take for instance the insurance industry, one that has been constantly in the news because of being hit by a barrage of complaints in respect ofmis-selling policies. And the reason? A challenge of limited expertise and skilled workforce. Skilled workforce is a crucial requirement in this industry for things such as risk-based underwriting, creating innovative products that will appeal to people, and more. But lack of suitable candidates (a survey estimates that there is a need of at least 21 lakh insurance educated employees by 2025), makes it extremely difficult for this sector to grow.

Which is why, skilling, especially soft skilling becomes crucial in improving the quality of engagement in the services sector. Right now, all we do is hire non-skilled workers from Tier 3 or Tier 4 towns in India, and push them into jobs without the right skillset or training. If we have to make the sector self-reliant, skilling has to be introduced as a crucial component in the sustainable and prolonged growth of services.

A much-needed change in sentiments

Corporations and corporates in India have evolved drastically in the last few decades, making them one of the largest contributors to a wide range of development issues, economic growth and productivity. A key component in the growth of corporates has been services, however, their importance remains largely underrated.

The role of corporate institutions in improving the quality of services sector, and making it more agile is very critical. The corporate sector will have to start considering services as an integrated part of their ecosystem, rather than just a third-party provider, or something that needs to be simply ‘outsourced’.

The skilling of staff that contributes indirectly to a corporate setup – peons, receptionists, housekeeping – is as important as the skilling of manpower that contributes directly to a company’s bottomline. That is because a multi-skilled, proactive, and customer-focused staff will contribute immensely to overall organizational performance.

Timely government interventions

The most important stakeholder of this entire ecosystem is the Government of India, which has so far not shown a lot of proactive efforts to regulate the services sector. It was only in 2017, that India's premier skill development platform, the NSDC, admitted that there is a growing need for renewed focus on the services sector.

To ensure employability and subsequent sustainability of the services sector, the government will have to take measures to stress on quality training of youth. Short-term skilling, for one, could be a big boon. In addition to this, the government needs to act as an interface with the industry to ensure that the policies are attuned to the needs and demands of key stakeholders.

A three-pronged approach

The growing importance of the services sector has to reflect in the way we look at the entire landscape. Those with purchasing power and authority must put pressure on improving the quality of the entire service ecosystem to be able to fully reap its benefits. The Indian economy is constantly changing with dynamic business models emerging every day, and a young demographic waiting to drive the growth engine. The need of the hour is to open up and remodel the services sector in a way that can truly contribute towards making a professional and self-reliant nation.

The author is the CEO and founder at The Pivotals.