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Mar, 03 2016

Serving To Excel In Franchise Arena

Business services sector is growing immensely in India. For someone who is to enter the sector, franchising provides an ideal platform. We take a sneak peek into this industry and the business opportunities in store.

BUSINESS services sector is one of the fastest growing industries in the economy and represents the change in the functioning of business in India. It is a cross vertical platform and addresses different domains of a business. It can be broadly classified into seven categories: marketing and advertising, building services and maintenance, recruitment, logistics, business process outsourcing, professional and legal advisory and other miscellaneous services.

These services supply solutions to firms on a fee or contract basis. The heterogeneous mix of individual industries is justified in the diverse occupational distribution of employment in business services, including métier of highly skilled managerial and administrative occupations, as well as lower skilled service vocations.

The growth of business services sector is governed by domestic and global factors. Dilip Chenoy, MD and CEO of National Skill Development Corporation commented the sector is set to improve with an expected growth of 7.4% in FY16. The facilities management is expected to grow at 17% CAGR between 2015 and 2020. It is poised to surpass $19 billion mark attributed by the improving real estate, hospitality and retail sectors. The security services industry in India is looking at a growth of over 20%, and is expected to double the market size to INR 80,000 crores by 2020.Office leasing space market in Asia has been dominated by India with Delhi being the sprightly market amongst major cities. Information Technology and BPM sector in India is estimated to have generated $ 146 billion in revenue during FY 15 with a growth rate of 23.72%, according to Indian Brand Equity Foundation.

Challenges

Pricing and controls: For smooth functionality of complex outsourcing arrangements, total clarity around responsibilities, payments and expected service levels is required.

Offshoring: The rapid evolution of communication technology has paved way for profound shift in geographic distribution of services. The service providers should be able to present a myriad of efficient on-shore, near shore and off shore capabilities in order to be competitive in the market.

Innovator's dilemma: Aggressive competition and sluggish market growth lead to commoditization of several traditional and conservative business services activities.

Partnership and joint venture: Firms continue to rationalize the counts of business service providers for streamlining procurement and benefit from economies of scale. Several players in business services are inclining towards joint-ventures or partnering across domains in order to satisfy the appetite of the customers. Consequently, several important decisions becomes obligatory for resolving issues of the association.

Personnel management: Business services frequently tend to bring in challenges around workforce management and HR issues.

Benefits Of Franchising Business Services

 Franchising enables the management of the 'brand' to focus on core competences while entering a new geography.

 Franchising mitigates the risk in business services as it supports the franchisees by providing them with a proven SOP for that domain and expertise in workforce management.

 For brands looking at partnerships for capital and/or expansion in business services, franchising will be a competent option for brand building.

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