Information Technology in Services Sector — A Vision For India

Soumitra Biswas

Technology Information, Forecasting and Assessment Council
Department of Science & Technology, New Delhi-110016

Technoloy Information, Forecasting and Assessment Council (TIFAC), an autonomous organization under the aegis of the Department of Science & Technology (Govt. of India) plays a vital role in technology development and promotion in India through its various programmes.

Technology Vision : 2020

TIFAC embarked on a major long-term technology forecasting and assessment exercise — Technology Vision : 2020 on the national level encompassing various technology areas. A detailed survey of key areas in major infrastructure, advanced technologies and technologies with socio-economic implications was taken up. In a span of two years, over 5000 area experts from the industry, Government, R&D agencies and academia were brought together for a thorough survey of shared opinion in select areas.

Concerted action-plans were formulated on short, medium and long-term basis up to 2020 AD and seventeen key technology areas of prime importance to the country were addressed; around 100 sub-sectors were covered for specific details. The exercise was carried out in the backdrop of a complex and heterogeneous social milieu of India and thus a country specific vision emerged. The Task Forces were constituted for seventeen areas. Each Task Force was headed by a Chairperson and comprised a Co-Chairperson, Coordinator and panels of experts looking at major sub-areas covered.

The typical technology forcasting techniques like brain-storming scenario writing, delphi, nominal group techniques (NGT), etc. were adopted to some extent for the exercise to bring out the vision. The perspective/scenario reports of the panels, delphi responses, NGT ranking were formed as the basis to arrive at suggestions for policy guidelines, strategies and action-plans for Government, NGOs, industry, R &D institutes and academia to realize the vision for India for 2020 AD.

While Technology Vision: 2020 exercise covered classical technology sectors like agro-food processing, chemical industy, engineering industry, electronics, etc., this article focuses on services sector due to its immense potential for value-addition and employment generation. The services sector draws heavily on information technology (IT) for its advanced applications.

Services Sector

Services, the 'tertiary sector' of the economy, covers a wide gamut of activities like trading, banking and finance, infotainment, real estate, transportation, security, management and technical consultancy among several others. The contribution from services sector today stands over 40 per cent of the total GDP in India. The sector currently employs close to 20 million people in India. The TIFAC study on services covered nine select sub-sectors ranging from advertising, HRD services, testing and certification to Government administration.

For all the aforesaid areas, IT plays the prime role in information processing, storage and access with a view to providing improved services to the consumers. Some of the typical IT applications in major services sector are outlined in the following sections.

Financial Services

Financial services have been the major users of IT and communication technologies. IT expenditure by US banks has recorded a compounded annual growth rate of 8.4 per cent. The management information system (MIS), distributed computing devices, open systems, high-speed data networks (LAN MAN, WAN, ISDN, etc.), related database management services (RDBMS) have been important development milestones in IT with major impact on financial services.

The development of optical fibre has greatly improved the communication speed, anticipated to touch 2 trillion bits per second eventually. Packet switching transmission method like asynchronous transfer mode achieving a speed upto 622 million bits per second has been the major breakthrough in communication technology. CD-ROMS with storage capacity of 1.6 GB of data have been instrumental in fast information retrieval and access. Use of multimedia for storage of text, graphics, video, sound, etc. has immensely benefitted the information storage system. All these technologies are used extensively by the banking and financial services sector.

Automated Teller Machines (ATM)

ATMs, though operational in the country for quite some time, are expected to make a big head-way in India. It has been estimated that there are around 400,000 ATMs worldwide out of which 1,00,000 are located in Japan alone. The latest generation networked ATMs allow the user to perform upto 150 kinds of transactions ranging from simple cash withdrawals and deposits, to fund transfer to trading in stocks to buying mutual funds to something mundane like payment of electricity bills, booking air-tickets and making hotel reservations.

ATMs are synonymous with credit cards; 578 million credit cards issued worldwide were involved in a transaction of US $ 1092 billion by June, 1993. India is poised to become one of the world's largest credit and users by 2000 AD.

'Virtual' Bank

Multimedia technology has been quite effective in bringing the banking services to the door-step of its customers. The customer activated terminal (CAT) or Kiosk is an interactive multimedia display unit, housed in a small enclosure, typically consisting of a computer workstation, monitor, video disk player and a card reader. It allows the customers to browse through information and use the available banking services at their own speed. Some banks are thinking of establishing 'virtual' branches where a customer can walk through the door, explore services by touching parts of the screen and at any time call up a member of the bank staff by video conferencing. While the banks do not need to invest heavily in real estate for setting up such a branch, the customer gets the benefit of 'one-stop banking' at a convenient location.

Home Banking

Smart phones with screen built-in modems and programmable microprocessors let the customer access a variety of financial services from home.

Electronic Funds Transfer at Point of Sale (EFTPOS)

While travellers' cheques meant 'pay-now-buy-later' and credit cards had 'buy-now-pay-later' advantages, EFTPOS or debit cards signify 'buy-now-pay-now' but without cash transaction. The user presents his ATM card when he buys goods and the EFTPOS system immediately debits his bank account.

Smart Cards

The 'Processor' type smart cards with in-built integrated circuits (ICs) or micro-chips offer a wide range of transactional opportunities even from remote areas. The smart cards are extensively being used for employee 'clocking in', withdrawing cash from ATM, using pay-phones, payment of various bills, etc.

Electronic Data Interchange (EDI)

EDI typically denotes paperless financial transactions across the locations. EDI is fast becoming the norm for inter-company transactions and also for procurement of boughtout items from the suppliers. The companies can now operate their bank accounts through corporate banking terminals in their own offices which are linked to the bank computers. Companies can thus carry out transactions like transferring funds, managing its cash flow, opening letters of credit,etc.

without any paper work. Singapore has established trade-net to facilitate electronic submission of trade documents by traders to various Govt. agencies and the response of these agencies to the sender. It has reduced document processing time from one day to 15-30 minutes and the estimated saving are of the order of $ 1 billion annually.

Image Processing

As financial services including capital markets and banking are highly document intensive, image processing technology can have a far reaching impact for such applications for its 'Less paper ' handling characteristics. In banks, image technology could be used for automatic identification or character recognition to read text and diagram wherein the cheques or documents can be scanned..

Expert System

The financial services sector is increasingly using decision support systems (DSS) or expert systems for functions such as credit risk appraisal, forecasting loan delinquencies, investment decisions, etc. One of the most promising developments in this field is the use of 'neural network' approach to build an expert system which lets the software literally learn from example and experience. Several banks today are using neural network programmes to detect credit card fraud. It is also being used by some leading investment banks to track stock price patterns and predict their movements.

Advertising, Media & Infotainment

The areas of advertising, media and infotainment are interrelated and their growth and momentum are closely linked with economy, demography, life-style and simultaneously with technological innovations. The levels of literacy and poverty alleviation also have direct bearing on mass media. And again IT applications would have far reaching impact on these services sectors.

International Scenario

The Deloitte delphi survey of more than 100 industry executives (comprising chairmen/presidents/CEOs, VPs, directors/managers) from telecom, broadcasting and cable TV, consumer electronics, computer industry, publishing and advertising agencies in USA has predicted the following future scenario.

Internet has already revolutionized the media and advertising scenario all over the world. The companies in USA had spent US$ 70 million in 1993 (that was easily doubled in 1994) for advertising in the Internet. Internet usage is growing @ 15 per cent a month, that's 435 per cent a year ! currently more than 200 magazines are available online in USA. Time, Money and Entertainment Weekly provide full-text articles through their home-pages in the Internet. Newsweek on Prodigy enables advertisers use high quality graphics, video and sound. It is expected that 30-50 per cent of the magazines' earnings are from the advertisement whereas download fees from the users provide the rest.

The commentators have predicted some more interesting technological innovations. The most important of them all is interactive television, this is expected to be available by another ten years in advanced countries. This would provide the impetus for user controlled 'on demand' interactive advertising services. The interactivity reduces the time gap between image advertising and tactical promotions. Interactivity further allows the advertisers to target or address the audience with absolute precision. It is expected that 55-60 per cent of US households would be served by interactive networks by another ten years.

Future Scenario for India

Television would forge ahead with its domineering role in mass media relegating the print media much behind. With more and more channels getting available coupled with strong emergence of cable networks for localized programmes, TV would pave the way for multi-million rupees entertainment, advertisement and allied business. While rural sector would account for nearly 50 per cent of TV ownership, it is predicted that not more than two-thirds of all the households across the country would own a TV by 2020. TV (including satellite and cable transmission) would account for 40 per cent of advertisement outlays in 2020 against 22 per cent at the current level.

Online electronic newspapers may become a reality in India with the advances in telecom services but such dramatic changes are unlikely for at least another five years. Steep rise in input costs, declining advertisement support (anticipated to reduce by 20 per cent) and shortage of trained manpower would pose major threats to the newspaper industry.

Multimedia technology enabling simultaneous exhchange of voice, text and data would prove to be a major medium of advertisement. Spending on advertisement is expected to be around 5 per cent by 2000 and to reach 12-15 per cent by 2020 AD. Ultimately the market would see an increase from Rs. 350 million to Rs. 120-150 billion by 2020. Around 50-75 million household are expected to be potential users of multimedia by 2020.

The Annexure - A provides a glimpse of the technologies of future and their likely time-frame of introduction in the services sector in India.

Information Technology & Services Sector : Key Issues

While the technological possibilities of IT may be unlimited, their applications and adoption in INdia need a conscious approach towards business process reengineering of existing practices and procedures to take the fullest advantage of IT. Continuous training and skill upgradation of human resources assume critical importance towards absorption of new technologies.

The elimination of manual records, the introduction of electronic fund transfer, ATMs, etc. raise the important issue of security and integrity of data. This includes issues relating to confidentiality of information, preventing data corruption and prevention of fraud. Appropriate technologies for encryption of data for secured transaction, regular and multiple backups, extensive use of passwords and other forms of authorization would need to be adopted.

For paperless and electronic financial transactions in India, a host of legal aspects need to be looked into. As in case of EFT, a cheque is not required to be presented physically for making payment as per the current practice. Also the legal liabilities of banks and customers in case of loss of ATM cards, ATM frauds, etc. are not quite understood in the present system. The adoption of new technologies would warrant a thorough review of the system towards changed legal stipulations.

Finally, the most important aspect of costs involved and benefits expected need a closer scrutiny. Expenditure on IT has always not been in tune with the returns envisaged. The American example of spending US $ 100 billion on IT applications in financial services during 1970-80 has been a pointer. With 100 per cent more expenditure on IT per worker, it increased productivity by only 0.7 per cent per year. Hence, proper implementation programme and technology management aspects assume much importance.

This article attempts to touch upon the emerging IT applications in a few select services sectors. The TIFAC study covers in details the IT aspects in diverse sectors like marketing, logistics and distribution, technical and management consultancy to even in the Government administration.

The services sector covers a vast range of occupations involving comparatively little capital investment leading to gainful employment and has a very good potential for export revenues. The sector calls for continued induction and infusion of knowledge-based technologies with cutting edge applications of information technology. With the highly skilled manpower and excellent entrepreneurship qualities, India can truly emerge as a 'global player' in the services sector.

Annexure - A

IT applications in Services Sector : Future Scenario
No. Future Technologies

Likely Time-frame
of introduction
(in Years)


Networked ATMs for banking and other transactions

5 to 10

Smart phones for home banking operations

10 to 15

"Virtual" branches of bank operating from Customer activated terminal (CAT) or a kiosk

10 to 15

Debit cards for EFTPOS

10 to 15

Smart cards with built-in microchips for electronic cash, pay phones etc.

5 to 10

Electronic data interchange (EDI) for paperless banking transactions

5 to 10

Image processing

5 to 10

Expert systems and neural networks for credit risk appraisal, monitoringed/prediction of stock price movement, detection of credit card fraud

10 to 15

Business process reengineering, training & skills development for absorption of new technologies

5 to 15

Information security for confidentiality, prevention of data corruption and fraudulent practices

5 to 10

Legal aspects for paperiess and electronic financial transactions

5 to 10

Single optical fibre connection to homes to blur the differences between communication & infotainment cables offering the whole range of services like home shopping, music & movies on demand, interactive TV

10 to 15

Telemarketing & Visual Shopping would be in great demand

5 to 10

Online Electronic newspapers & magazines to dominate over print media

5 to 10

Multimedia technology & Virtual Reality to emerge as the major medium of advertisement

5 to 10

Availability of Interactive Television & user controlled on-demand interactive advertising

10 to 15

Direct broadcast satellites, PCs for reading electronc book, digital camera for storing, viewing & editing still photographs on discs to be available

5 to 10

Bar coding to emerge as an important device for payment processing, accounting & inventory management.

5 to 10

Decentralized warehouses to act as hubs for rural distribution to be networked to manufacturers, material suppliers etc.

10 to 15

Complete networking of supply chain viz. retailers, distributors, warehouses, transporters, manufacturers, material suppliers etc.


Use of demographic database for age & sex composition, income levels & distribution, regional disparities, fertility & mortality rates, incidence of diseases, life expectancy, etc. would come handy for designing new insurance products & services

10 to 15