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KPMG says Indian service sector outlook bright

KPMG says Indian service sector outlook bright
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First Published: Tue, May 20 2008. 11 55 PM IST

Strong optimism: Convergys employees in Gurgaon. The service sector in India is estimated to have grown at 10.4% in 2007-08.
Strong optimism: Convergys employees in Gurgaon. The service sector in India is estimated to have grown at 10.4% in 2007-08.
Updated: Tue, May 20 2008. 11 55 PM IST
New Delhi: India’s service sector expects strong growth over the next year on account of more marketing, new product introductions and entry into new markets, according to the spring 2008 KPMG Business Outlook Survey.
Strong optimism: Convergys employees in Gurgaon. The service sector in India is estimated to have grown at 10.4% in 2007-08.
The survey, which covered 1,400 service providers across the four Bric countries (Brazil, Russia, India and China), found that service sector firms in all four were upbeat, but positive sentiment was most widespread among Indian firms. The level of optimism for Bric’s service companies was, however, lower than that recorded in a KPMG Outlook Survey carried out last autumn.
The net balance of firms anticipating growth of activity in the spring survey was 58% compared with 65.7% in the autumn survey.
“The current optimism reflects the unique positioning that India has with its large domestic market, off- shoring service capabilities and economic value drivers,” wrote Russell Parera, chief executive, KPMG India.
The service sector makes up about 63% of the Rs46.93 trillion economic activity estimated in India in 2007-08. The sector is estimated to have grown at 10.4% in 2007-08, a percentage point lower than the previous year’s growth.
The surveyed Indian companies expect input cost to rise significantly over the coming year, but do not expect to be affected by it. The sector expects to retain a significant degree of pricing power and pass on much of the increased cost to customers, the statement said.
Across Bric, the survey’s findings showed company profitability is expected to rise strongly over the next year, with Indian firms being the most optimistic as regards profits.
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First Published: Tue, May 20 2008. 11 55 PM IST