India's Services Sector Sees Surge in Growth: What It Means for Employment

Significant Growth in India's Services Sector

New Delhi: The growth of India's services sector reached a two-month peak of 58.5 in January, driven by an increase in new business and output, leading to more hiring among service providers, according to a recent monthly survey.

The seasonally adjusted HSBC India Services PMI Business Activity Index climbed to 58.5 in January, up from December's low of 58.0, primarily fueled by strong demand, new business opportunities, and investments in technology.

In the context of the Purchasing Managers' Index (PMI), a score above 50 indicates growth, while a score below signifies contraction.

"The rise to 58.5 in January from December's 58.0 indicates ongoing momentum in the services sector. The robust growth in output is attributed to a steady influx of new orders, particularly from international markets in South and Southeast Asia," stated Pranjul Bhandari, Chief India Economist at HSBC.

Service providers reported a notable increase in new business and output, with a more optimistic outlook prompting them to expand their workforce, as highlighted in the survey.

The survey indicated that new orders surged at the fastest rate in two months, with the domestic market being the primary source of these gains, although international orders also saw significant growth.

Participants in the survey noted new business opportunities from clients in countries such as Indonesia, Kenya, Malaysia, Oman, Qatar, Sri Lanka, Thailand, and Vietnam.

Optimism among service providers regarding future prospects has increased.

"Business confidence has risen to a three-month high, bolstered by efficiency improvements, effective marketing strategies, and the acquisition of new clients. While input and output prices are on the rise, they remain relatively moderate compared to historical averages," Bhandari added.

Regarding pricing, the survey reported moderate increases in input costs and selling prices.

The Consumer Services sector experienced the most significant cost pressures, while the Finance & Insurance sector saw the largest rise in output charges. Additionally, January witnessed a quicker increase in new orders and output across India's private sector, contributing to job creation and enhanced business confidence.

The HSBC India Composite PMI Output Index improved from December's 11-month low of 57.8 to 58.4 in January.

Composite PMI indices are calculated as weighted averages of the manufacturing and services PMI indices, reflecting the relative sizes of these sectors based on official GDP data.

"The composite PMI's strengthening in January indicates robust demand growth across both manufacturing and services sectors," Bhandari noted.

On the employment front, after stagnation in December, private sector job growth resumed at the beginning of 2026, with slight increases observed in both manufacturing and service sectors, according to the survey.