slump in the main sectors of the indus-try did not effect a slowdown in the growth of the
services sector. The services segment is very cost-sensitive and profit-sensitive and it
relies on IT for better return on assets and achieving enhanced levels of customer
service. The segment spent around Rs 750 crore in the year 1997-98.
The services segment encompasses a wide spectrum of
industries covering hospitality, health services, express services, management services,
and publishing/media, to name a few. Additionally, one could also include airlines,
tourism, transportation and allied services. Quite a significant number of organizations
fall under the small and medium businesses category. Traditionally, the service segment
companies have a higher reliance on IT though this varies from industry to industry. The
leaders in express, media, airlines, and the hospitality industries have always been at
the forefront of IT usage.
Two important parameters that control the performance of
any service sector industry is the level of service and the corresponding cost incurred.
Even small increases in service levels sometimes warrant disproportionate increases in the
technology infrastructure. But even then such technology investments are needed, since
service levels are sometimes measured in seconds in some cases. Unless IT-enabled service
systems take on the job, it becomes very difficult to create customer lock-in. That is why
express companies invest in elaborate networks to track-n-trace packets, hotels have
express check-out, airlines can accommodate customer preferences, and the like.
Use of IT in the airlines industry is moving beyond the
area of passenger reservation and cargo. In order to improve their yield from assets,
airlines are looking at yield management functions using IT. Aircraft maintenance
engineering and crew scheduling are also getting to be important areas. Indian Airlines
and Air-India were both running on Unisys systems. Last year, Indian Airlines successfully
migrated to the IBM ES/9000 platform. The application solution from British Airways,
called Speedwing, was also implemented as part of a turnkey project by IBM. Jet Airways
has outsourced its IT on a pay-per-transaction basis to the SEVA network. Traditionally,
the airlines sector worldwide relies on outsourcing deals with technology service
companies because the service uptime is very critical. IBM has bagged a five-year
outsourcing deal valued at $ 150 million from Cathay Pacific.
There is tremendous scope for IT at airports. The
government policy on airport authorities is still evolving and one may see many airports
maintained by private companies. Lots of IT solutions exist in this area and it presents a
very good SI opportunity for the IT vendors. Some examples are automated gate readers,
boarding card readers etc.
Use of IT in
the publishing industry has now gained maturity. Almost all the publishing majors like
Bennett Coleman, Indian Express Group, Living Media, and others now rely on IT for all the
internal and external publishing functions. Office automation beyond local area networking
involving groupware and messaging is also prevalent. The Times Of India intranet
implementation is one of the best examples of intranets in the country. There is even an
ERP implementation in the publishing industry. The Kottayam-based Malayala Manorama Group
has gone in for SAP to handle the entire gamut of their publishing operations.
The hospitality sector, too, is gaining maturity in IT
usage. The Taj Group, the Oberoi Group, and the Welcomgroup are some of the efficient
users of IT in the hospitality industry. With most of the back-office and front-office
automation in place, the star-graded hotels are looking at harnessing IT for emerging
applications like ecommerce and data warehousing to get to the next level of returns. This
includes designing loyalty programs and positioning on the Internet to attract foreign
business and tourist travelers. Service is extremely cost-driven in the hospitality
industry and efficient property management systems help in reining control over the costs.
With lots of newer properties coming up, there is a 40-percent increase in capacity
expected in the three-star to five-star category. Some of the new entrants are the Four
Seasons group and the Hilton Group.
The Railways, which falls under the public sector, has
unfortunately been lagging in terms of IT usage. After the big move towards computerized
reservations four to five years back, nothing new has been undertaken. In this sense, the
Indian Railways is only looking at organic growth and not a quantum one. Freight
management, a big revenue earner for the Railways, has only rudimentary IT components in
its operations. This area could give the Railways a couple of hundred crores each year in
savings alone if proper freight management systems are put in place. Despite this, the
Railways spend around Rs 100 crore every year on IT for routine system and infrastructure
Overall, the services sector has a lot of untapped
potential for IT usage. Since a significant portion of the companies in this sector fall
under the small and medium businesses category, the growth in IT investments in this
sector would be unprecedented. A vibrant economy coupled with increased penetration of IT
in the small businesses segment will help realize this potential.