Mumbai: The service sector in the country will grow at more than 9.5 per cent during the current year despite the current economic slowdown, according to a survey of company chief executives conducted by the Confederation of Indian Industry (CII).
About 66 per cent of the services sector CEOs polled expected the service sector to grow at over 9.5 per cent. The majority of the CEOs (58 per cent) did not expect service sector growth to decline during the current year.
The major impediments to service sector growth as revealed by the CEOs were global economic slowdown, deceleration in the economy and shortage of talent and skills.
''The CII snap poll reveals robust services growth expectation during the current year and supports GDP growth expectation of 8 per cent plus. Both investment and employment is expected to increase in the service sector despite pressure on profitability during the current year,'' said Chandrajit Banerjee, director-general, CII.
The poll found investment outlook for the current year positive. Of the CEOs polled, 97 per cent expected to continue with their expansion plans and also expected 90 per cent of the firms in their area of business to continue expanding during the current year.
Revealing the investment expansion for the entire services sector, 87 per cent of the CEOs felt that expansion would continue during the current year.
A majority of the participating CEOs expected employment during the current year to increase. CII snap poll enumerated sectorwise status of employment outlook for the current year and the responses are:
- Employment to increase in financial services - 64 per cent
- Employment to increase in IT, ITES and telecom - 66 per cent
- Employment to increase in health care sector - 94 per cent
- Employment to increase in retail - 88 per cent
- Employment to increase in tourism - 82 per cent
While the growth and investment outlook, as revealed by the snap poll, is healthy, the margins are expected to be under pressure. Of the CEOs polled, 86 per cent of them revealed that profits would be under pressure. The main reasons for pressure on margins were revealed as (i) high interest rates, (ii) stiff domestic competition, (iii) increase in staff costs and (iv) stiff global competition.