IIIT-A ranks 11th
in the 2006
all india rankings
of top T-Schools

IIIT-A welcomes
Class of 2008

Companies wish to
register with us
for Placements'2007
are adviced to
approach us from

2nd year students
back from summer interns
Top-notch Indian
and foreign MNC's
recruit class of 2006.

Notable amongst are:
Intel,HCL Comnet
MBT,Rolta India
ICICI Prudential
India Bulls

MBA@IIIT-A achieves
100% Placements
for class of 2006
and 2 foreign placements

IIIT-A signs
MOU with
Buffalo University,USA

Prof. S K Tripathi
and Prof. Stephen Dunnett
from Buffalo University
interacts with
MBA students

Mr Sanjiv Bikchandani,
CEO and Co-Founder
of Naukari.com
visited the campus

Dr. T K Vishwanathan,
Secretary Law Commission
of India, New Delhi,
visited Campus

Mr. K Vaitheeswaran
COO FabMall
visited Campus

While surfing came
across your extremely
organised B school
Keep up the
good work
--Amit Kumar
School Of Mangement,
Asian Institute of

IIITA's e-Magazine
  Oct-Dec 2007 Vol 4 Issue 15

Every Business is a Service Business

by Rahul Jain
MBA-IT 3rd Sem, IIIT-Allahabad


Every business is fundamentally an anthology of processes - a few strategic, a few tactical, but all necessary. And today's processes are gradually more complex, full of deeper interactions across systems and dependent on more collaborative activities between users. Service-Oriented Architecture (SOA) assures to escort in a new era of business agility. But that agility depends as much on supporting new efficiencies for people as it does on liberating access to systems and services.

After the excitement, a return to fundamentals: the qualities of conventional business virtues, among them customer service, are being experienced again. Organisations are becoming conscious that, in order to compete fruitfully, they must transform themselves from being product-focused organizations to service driven ones. Brilliant customer service can now be a key competitive advantage. However, the change from a product business to a service business will not be easy.

The last few decades of the twentieth century witnessed a dramatic increase in the number of books published on management; the letters that were being prefixed to the word ‘business’ too increased, seemingly almost in direct proportion to the number of books being published. First there was e-business, and then there was m-business - both terms which soon entered common usage, though now somewhat diminished in respectability and credibility after the dotcom and telecom busts. But the fad continues: management writers seeking to launch the next big idea, still search for more prefixes. With all this, one hesitates to mention s-business – business with yet another prefix. However, the term seems to be an idea whose time has come. In the post dotcom world, it appears that all businesses do not have to become m-businesses, or even e-businesses, to survive. The virtues of conventional, dull old business principles have been rediscovered by at least some management pundits.

The term s-business (‘s’ in stands for service) is now an indication of the increasing emphasis that customers are now placing on service. 

From Products to Service 

In many economies around the globe, we have seen a shift from manufacturing to services; services now constitute a large share of the GDPs of many provinces. So it seems with businesses too, many of which seem to be shifting their prominences from products to services. Indeed, at least for some firms, their tangible products seem to have become virtual loss leaders, helping them sell services where they craft a fine part of their profits. 

The transformation of the product businesses of yesteryears, into the service businesses of today is taking place due to a number of factors: 

In today’s bloodthirsty marketplace, maturity in technology have made it difficult for many companies to differentiate their products solely on the basis of quality or additional product features. For most products, high quality is now the norm, so much so that it is no longer a sufficient condition for competitive success, but merely a necessary condition. Adding new bells and whistles to existing, mature products seems to be an exercise which yields steadily diminishing returns on investments.

In such circumstances, firms must differentiate their products and persuade customers based on the quality and charisma of the service they provide. Today’s products are much more complicated and sophisticated from a technological point of view, than the products of a few decades ago. This increasing technological sophistication has not resulted in a commensurate level of user-friendliness. To take an old and oft-quoted example of technological complexity combined with a distinct lack of user-friendliness - consider VCRs. Or consider personal computers. According to some writers, computers, as they are supplied to customers today, are assemblies, not finished products. The fact is that the average customer is finding it increasingly difficult to cope with the complexity of installing and trouble shooting many of today’s technologically challenging gadgets. This is yet another reason for the growing importance of service, both to customers and to the companies that manufacture and market sophisticated products.
The service business could be lucrative as well. Competition has had an impact on margins in the products business. Services constitute an increasingly significant part of many companies’ revenues and profits. Service revenues also have the added advantage of providing fairly predictable and even cash flows, when customers are locked into multi-year maintenance agreements. Add to all this the usual suspects in current business writing: the Internet, more discerning and demanding customers, greater access to product information, and so on. Little wonder then, that service is assuming a level of importance which would have been inconceivable even twenty years back. 

Every business now needs to think of itself as a service business. However, this is easier said than done. How does one go about transforming a traditional product focused business into a service driven business, or ensuring that the organization retains a service edge over the competition? To do this, one must start with a clearly defined service quality strategy.

Service is defined by two factors:- 

  • Performance of the service or product
  • Perceptions of the service or product

Both these must be properly managed by the firm. To do this, according to some writers, it is useful to treat services like tangible products – which makes them more concrete, and consequently, more amenable to measurement and monitoring. Starting from this, the organization must define the service quality it aims to deliver, and formulate and implement appropriate strategies to attain this end. Perceptions are as important as performance.

In the face of increasing competition, there is a tendency among sales people to over promise - to promise features, functionalities, or levels of service that they know that their product or their company will not be able to deliver, in order to shut out the competition and close the sale. This is often a critical, costly error. A disappointed customer is often a lost customer. By raising expectations to close one sale, the sales person has put in jeopardy many potential future sales. More than strategies and systems, people are of critical importance in service.

They make all the difference in the customer experience. All of us have our own personal horror stories of poor service: the rude serviceman, the indifferent desk clerk, the inefficient repairman, in almost all these cases, the starring roles are played by service employees.

To ensure that the firm has good staff, all aspects of the human resources function require considerable thought and attention – including hiring, compensation, performance management and training. Front-line people in the organization, who are likely to have the most contact with customers, must also be suitably empowered, so that they can provide timely and relevant service.

The Internet has changed the service aspects of business as much as it has changed other aspects. From e-mail to expert systems and customer accessible databases, the applications which use the Internet to improve the customer experience are innumerable. An organization which wants to focus on customer service will make use of all the technological tools available, to attain its objectives. A few words of caution though: Technology in itself is never enough to provide good, or even adequate levels of customer service. In almost all service interactions, customers look for the human touch.

If globalization and standardization appear to be threats to many firms, in equal measure, they provide opportunities to others. Service is a knowledge and people intensive process. Globalization has shaken up manufacturing in high wage countries, with most of the activities associated with it moving to low wage, low cost countries. It is now the turn of service to move to locations which provide cost and other advantages. This provides great opportunities for growth and expansion to companies in many developing countries, especially the ones with good quality, educated manpower. The current debates on businesses outsourcing many of their non-core process to firms in developing countries such as India are just harbingers of greater changes to come.     

How easy (or difficult) is it going to be, to transform a traditional business into a service business?

 In fact, the question is probably irrelevant in many cases. For most product organizations, if they do not start thinking and behaving as service organizations, it is unlikely that they will be still around a few years from now. At least, as customers, let us hope this will be the case.

Factors in favor of India as a emerging Superpower

Demographic factors

Big - India has the world's second largest population. The government has attempted to control the population so as to avoid overpopulation. Some South Indian states have slowed down their population growth to below 1%.

Youthful - Due to its high birth rate India has a young population compared to most aging nations. It has approximately 60% of its population below the age of 30. In addition, declining fertility is beginning to reduce the youth dependency rate which may produce a demographic dividend. In the coming decades, while some of the powerful nations witness a decrease in workforce, India is expected to have an increase.

Global Diaspora - More than 35 million Indians live across the globe. Under fair opportunities, they have become socio-economically successful.

English - India has the world's largest English speaking/understanding population. Claims one of the largest workforces of engineers, doctors and other key professionals, all comfortable with English. It has the 2nd largest population of "fluent English" speakers, second only to the U.S., with estimates ranging from 150 to 250 million, and is expected to have the largest in coming decades.

Political factors

Democratic Republicanism - India is the world's largest democratic republic, more than three times bigger than the next largest (U.S.). It has so far been successful, at least politically, especially considering its functionality in difficult ethnic composition. The fact that India is a democracy has improved its relations with other democratic nations and significantly improved its ties with the majority of the nations in the developed world. Candidate for Security Council - India has been pressing for permanent membership of the Security Council (as part of the G4 nations) but without veto ability. It has received backing from the UK, France and Russia. However, China and the U.S have not been supportive of the bid. With improved Indo-US relations, the US is expected by some to reconsider its stand.

Foreign relations - India has developed relationships with the world powers like the EU, the U.S., Japan and Russia. It also developed relationships with the African Union (esp. South Africa), the Arab World, Southeast Asia, Israel and South American nations (esp. Brazil). In order to make the environment propitious for economic growth, India is investing on its relations with China. It has significantly boosted its image among western nations and signed a civilian nuclear deal with the United States in March 2006. It is also working for better relationships with Pakistan and Iran.

Economic factors

Booming Economy - The economy of India is currently the world's fourth largest in terms of real GDP (PPP) after the USA, the People's Republic of China and Japan, and the second fastest growing major economy in the world, averaging at an annual growth rate of above 8. India’s Economy has experienced a robust growth in the second quarter of the year 2006-07. The Gross Domestic Product in the country increased at an impressive rate of 9.2 percent per annum. The GDP Growth was mainly led by the fast rising industrial production as well as the growth in the services sector. The Fiscal Responsibility and Budget Management Act in India has resulted a declining deficits both in the center and state levels. Some deficit indicators are expected to decline by 0.7-09 Percent of GDP for the year 2006-07. India is becoming one of the world's leading producers of computer software and with mushrooming R&D centers; it is experiencing a steady revolution in science and technology. A typical example of India's rising scientific endeavors is that it was the 3rd nation to found a National Space Agency called ISRO, after the USSR and the U.S. It was the third Asian nation to send satellites into space after China and Japan in 1970, starting with Aryabhata in 1975. By 2008 it plans to send an unmanned mission to the Moon. India is among the world leaders in remote sensing, a technology coming to great use, among others, to Indian fishermen & farmers. India is also trying to join international R&D projects - e.g. it has recently joined the European Galileo GPS Project and the ITER for fusion energy club. Some Indian educational and research institutions like IIT, IIM, IISc, TIFR and AIIMS are among the world's best.

Military factors

Total Strength - The Indian Armed Forces, India's main defense organization, consists of two main branches: the core Military of India and the Indian Paramilitary Forces. The Military of India maintains the third largest active duty force in the world after the People's Republic of China and the United States while the Indian Paramilitary Forces, over a million strong, is the second largest paramilitary force in the world. Combined, the total armed forces of India are 2,414,700 strong, the world's third largest defense force.

Points against the rise of India as a superpower by 2020

Political obstacles

India has had border disputes with both the People's Republic of China and Pakistan. This has led to 3 wars with Pakistan and a war with China. Mapped is the location of the 1999 Kargil Conflict, which is the most recent of India's direct military encounters with the Pakistani military.

Cost of Democratic Republicanism - Democratic republicanism has its value, more so in a multi-ethnic country like India. However, the applicability of the "theoretical" virtues of republicanism on a country like India is sometimes questioned. Some thinkers consider India's diverse democracy to levy a huge tax on its economy.

Lack of international representation - India is not a member of the UNSC, although currently it is one of the four-nation groups actively seeking a permanent seat in the council. Thus India lacks the ability to extend its influence or ideas on international events in the way superpowers do.

Poverty - As of 2005, approximately 22-26% of India's population lived below poverty line. Poverty also begets child labor. Various reforms, including mass employment schemes have been undertaken by the government to tackle this problem, and India has been quite successful in reducing its share of poverty. The number of people living on $1 a day is expected to fall in South Asia from 41.5 per cent in 1990 to 16.4 per cent until 2015.

Official numbers published by the Government of India, showing a reduction of poverty from 36% (1993–94) to 26% (1999 – 00), to 22% (2004 - 05), have been challenged both for allegedly showing too little and too much poverty reduction.

Disorganization - India's continual economic prosperity is also hindered by bad government and ubiquitous red tape (‘Bureaucratic Raj'). Retrogressive government regulations affect many areas. For example, in some states, black outs and power rationing are common due to underinvestment, differing state and local regulations, etc.

Unemployment - Unless India finds a quick way to generate jobs, its population of unemployed youths could be a reason of instability. India's growth in the services sector and Information Technology sector has not been matched by growth in manufacturing which can provide more jobs.

Low Literacy - As per the 2001 India census, India's national literacy is only 65.2 percent. Literacy drive is spreading slowly to other states. India's youth (age 15 to 24) literacy rate was 76.4% between 2000 and 2004. At current rates India will take no less than 20 years for a literacy of 95%.

Social Divide - The problem of India's social divide is often linked to its millennia-old caste system. In an attempt to eliminate the caste system, the Indian government has introduced special quotas for low-caste Indians in educational institutions and jobs. The measure is with the motive of helping lower-caste Indians to pursue higher education and thereby elevate their standard of life. However, the system is often criticized about its effectiveness as so called creamy layer (rich among the lower caste) get non-needed advantage & leave other lower caste groups poor only. There also have been cases of reverse-discrimination and persecution of upper castes by lower castes.

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