Professional Documents
Culture Documents
CLASS : SS3
ASSIGNMENT : Service dustry
The growth of the service industry in the past two decades has prompted a
number of questions about this sector of the American economy and the reasons
for this trend. Some questions about the growth of the service industry include:
What is the service industry and what types of businesses operate in it? What are
the trends in growth for the service industry and the reasons underlying its
growth? How is the service sector affected by recessions and economic downswings? What are the human resources issues associated with the service
industry? How is offshoring affecting American service jobs? What is expected in
the future for the service industry?
The service sector is difficult to define and to encompass. There are a number of
ways to identify the sector, its divisions, its industries, and the types of jobs
within them. The general category of the service division includes a wide variety
of industries, but can be categorized into primarily consumer-oriented (providing
a service directly to a consumer), primarily business-oriented (providing a
service directly to another business) or mixed (providing services to both
businesses and individual consumers).
Recruitment and selection practices in the services sector are as varied as the
types of positions in this sector. The areas that are counter-cyclical or noncyclical, however, may require stronger or more creative recruitment practices.
As mentioned previously, many of the job areas that grow during economic
recessions do so because there are fewer attractive job options available. Thus,
during strong economic conditions, these areas (i.e., health care, day care,
amusement and recreation, and private colleges) may have difficulty recruiting
job applicants, and may need to be more innovative in their approach. During
strong economic times, this may also mean that these counter-cyclical areas
may find a lack of suitable job candidates, which may mean that selection
criteria are changed, such that some skills are trained by the organization rather
than having them present upon hire.
Labor unions originally grew in prominence in goods-producing jobs but now also
represent many employees in the service industry. Although labor union
membership has declined overall in recent decades, unions are still a presence in
both manufacturing and service jobs. For instance, the Service Employees
International Union (SEIU) is the largest and fastest growing union in North
America, representing employees in areas of health care (e.g., nurses and
nursing home employees), public services (e.g., schoolteachers and other
government employees), building services (e.g., janitors and security guards),
and industrial and allied employees (i.e., services in industrial companies). The
SEIU has actually grown in membership over the years, from 625,000 members
in 1980 to over 1.8 million today, and this growth has coincided with the increase
of jobs in the services industry. Many service sector employees seek
representation from a union due to concerns about pay, benefits, and job
security that may not be as strong as in some other areas of the economy.
OFFSHORING
One topic that is becoming increasingly important to the services division of the
U.S. economy is offshoring. Offshoring occurs when U.S. jobs and production are
relocated to a foreign country. Offshoring can be contrasted with outsourcing,
which occurs when a company contracts with another company to perform part
of their work, but does not necessarily shift to a foreign country.
While offshoring has received a great deal of recent media attention and
increasing in the U.S., levels of job losses in the service sector due to offshoring
are small relative to total U.S. employment. McCarthy indicates that an
estimated 103,000 jobs moved offshore in 2000, and Mark Zandi estimates that
the loss in service jobs due to offshoring was about 75,000 per year from
February 2001 to October 2003. U.S. employment statistics further indicate the
small risk for offshoring of service jobs, with approximately 14 million jobs
currently at risk for offshoring, but about 96 million jobs at low risk for offshoring
in 2000. However, these estimates may either understate or overstate the total
effect of offshoring on U.S. employment. New jobs may have been created
overseas by U.S. companies, rather than shifting existing jobs away from the U.S.
Offshoring of service jobs has increased and is likely continue to do so, experts
believe. Research indicates that offshoring has increased pace in recent years.
This trend is worrisome, because of the possible impact on the U.S. economy.
Some analysts believe that the service sector taking longer to rebound from the
2001 recession is partly due to offshoring. McCarthy estimates that a cumulative
job loss of 3.4 million jobs and respective wage loss of about $151 billion will
occur by 2015. The increase in offshoring has caught the attention of U.S.
lawmakers, as Congress and state legislators have focused attention on the issue
and have even introduced legislation to limit offshoring.
India has gained many U.S. service sector jobs through offshoring in recent
years. Much of this is due to India's focus on becoming more prominent in the
world in their information technology capabilities. Additionally, many Indians now
pursue higher education to give them skills that prepare them for jobs in which
there is a labor shortage. For instance, many U.S. employers are now hiring
Indian call center agencies to provide customer service to clients in North
America. Calls from overseas (e.g., American) customers are routed to an Indian
call center, where an Indian employee who speaks English (often with little Indian
accent) assists the customer with his or her computer problem or other customer
service need. Because skilled Indian employees cost far less than similarly skilled
American employees, offshoring for this job is very attractive to American
companies wanting to cut costs. Author Paul Davies notes that the annual cost in
2003 of an American employee in a U.S. call center was about $43,000 but that a
similarly skilled Indian employee cost about $6200.
The services sector is distinct from the goods-producing sector in the U.S.
economy, and includes a very wide variety of industries and jobs. The number of
jobs in the services sector has been growing in recent years, and data from the
U.S. government indicate that this trend will continue. While many service sector
jobs are believed to be recession-proof, only some areas of that sector are truly
counter-cyclical, and some are simply noncyclical, meaning that they resist job
loss during times of economic downturn. As service sector jobs increase in
number, there are new concerns for managing human resources, one of which is
the issue of offshoring, which is increasingly slowly.
REFERENCE
http://www.referenceforbusiness.com/management/Sc-Str/ServiceIndustry.html#ixzz4OdMlGT70