EXPORT CONSULTANCY SERVICES

 In today’s globalization era, it has become imperative for

companies to expand outside their home markets in
order to survive.
 With margins shrinking in the domestic markets due to
competition from small size vendors; large companies
have been forced to expand their operations in other
countries
 . Organizations face severe challenges while expanding
their operations outside their home territories. These
challenges could be linguistic, cultural, or legal.
Companies also face regulatory problems due to their
limited knowledge about local business practices;
 it is at this juncture that business consulting services
prove to be useful
DEFINITION OF EXPORT
CONSULTANCY SERVICES
 includes services contracted for and
provided to organizations by
specially trained and qualified persons, who
assist in an objective and independent
manner.
 The client organization to identify
management problems, analyze such
problems, recommend
solutions to these problems, and help,
when requested, in the implementation of
solutions.
 SERVICES PROVIDED BY EXPORT
CONSULTANCY
 These business consulting outfits provide information,
consulting, and insights to exporters so that they can
take accurate decisions.
 Most of these agencies are staffed with professionals
who have decades of experience in international sales
management and export consulting.
 Availing the services of these business consulting
outfits will helps to acquire the know-how to
penetrate foreign markets successfully. If you are
looking for a suitable acquisition target to
complement your existing bouquet of services then
these consulting outfits will help you search for the
right company for acquisition or investment.
 These agencies suggest acquisition targets only after
doing a thorough analysis of the target company’s
business model and financials
CONTD…..
 Usually services begin right from the first client
meeting till the signing of the contract.
 If clients want assistance during business
negotiations or while drafting business contracts these
agencies will help them with this also.
 Assistance with respect to sourcing of suppliers is
also provided.
 Whether you are looking for new equipment
manufacturers or procurement vendors these
agencies will assist you on all these counts helping
you to stay competitive in the marketplace
CONTD….

 Some of these business-consulting outfits also offer

linguistic support enabling you to enter those markets
where English is not the native language.
 In fact, English is the native language of less than ten
percent of the global population which highlights how
important these agencies are for international business
development.
 This type of translation support proves very crucial
while translating brochures, advertising texts, contacts,
web pages and similar such marketing literature.
 Though these business consulting services are slightly
costly but the experience of companies who have availed
these services is that the return on investment far
exceeds the investments made
India’s Growing service sector

 India’s services sector has matured considerably

during the last few years and has been globally
recognized for its high growth and development. This
sector has been growing at an annual growth rate of
about 28% during the last 5 years. Services exports
amounted to a meager US$ 8.9 billion in 1997 but
over the years services exports have grown
substantially. There has been rapid growth in the
services exports from the year 2002. The exports
have grown up from US $ 19.1 billion to US $ 73
billion in 2006. Presently services sector account for
about 55% of India’s GDP
Contd..
 India’s share in worldwide service
exports is expected to almost triple
itself from current 2.3 % to 6 % by
2012, if the present annual growth
rate of 28% has been maintained.
India’s global exports of commercial
services during the last 10 years can
be seen from the table below –

India’s
 Years ExportsUS $ (Billion
 1997 8.9
 1998 11.0
 1999 14.0
 2000 16.0
 2001 16.8
 2002 19.1
 2003 23.1
 2004 38.5
 2005 68.0
 2006 73.0
 Source: WTO
BPO IMP.
 Business process outsourcing (an
important source of
services export income) in India
 such as data entry, insurance claims,
call centres and database services,
grew at an
 extraordinary 100 per cent per
annum in the five years t
TYPE OF SERVICES
 Management Consultancy
 Advertisement
 Manpower recruitment
 Business Auxiliary 
 Consulting Engineer / IPR
 Insurance
 Banking & financial
 Telephone
Type of export of services
 Advertising agency (e) * Banking and Financial services (zm) *
Broadcasting (zk) * Business auxiliary services (zzb) * Cable
Operator (zs) * Computer network (On-line information and data
base access or retrieval) (zh) * Consulting Engineer (g)
 Facsimile (FAX) (zg) * Foreign exchange broking (zzk) * Franchise
(zze) * General insurance of other than immovable property (d) *
Insurance Auxiliary (zy and zl) * Intellectual property (zzr)
 Leased circuit (zd) * Life insurance (zx) * Management Consultant
(r) * Mailing list compilation and mailing (zzzg) * Manpower
recruitment agency (k) * Pager (c) * Programme Producer (of TV
or Radio programmes) (zzu)
 Rail travel agent (zz) * Scientific and technical consultancy (za) *
Survey and map making of other than immovable property (zzzc)
* Telegraph (ze) * Telephone (b) * Telex (zf) * Transport of goods
through pipeline or other conduit (zzz)
EXPORT OF SERVICE

 Meaning of Export of Service – Example
A Inc. (Non resident)
(Instructor)

X Ltd.(resident) P Ltd. (resident)

(Service Provider) (Beneficiary of Service)
-Whether export of service
- Residence not essential for Category 2
EXPORT OF SERVICES
Distinction between Service & Activity
Outside India In India

Overseas MT Agency  Confirm Payment Representative of 

(Bank) Overseas Bank
Reimbursement

Approach Rep.

Pay Money
Pay Money

Mr. X Indian Beneficiary
Sends money CODE Mr. Y
(Service Recipient)
Example of export services

Services relating to property :  

e.g. General Ins., Architect, Interior Decorator, 
Real Estate Agent, Construction, Site preparation, 
Dredging/ Map making

     Rule : Property should be outside India
EXPORT SERVICES : Rule 3 (ii)
 Service provided from India

 Used in business  or for any other purpose 
outside India; and

 Payment in convertible currency
Clients

 • Most consultancy assignments originate with the

request from the client.
 A useful technique for identifying the real decision-
maker early in the project is to propose several
reasonable outcomes for the client's problem.
 • The response to these reasonable ideas indicates
whether or not the consultant is dealing with the real
client, the decision-maker. In consulting sector, the
clients are broadly classified into different categories
i.e. Government institutions, funding agencies
(Bilateral Agencies andMultilateral Agencies),
corporate clients and others like Non Government
organisations
Size of the Consultancy sector in
India

 • The development of consultancy capabilities and

business is directly proportional to growth ineconomic
and industrial development. Due to the nature of the
industry, getting accurate estimates of its size is
difficult. It is estimated that the consultancy business
in India engages about 100,000 persons in about
5000 consulting firms. According to estimates, the
current size of the consulting industry in India is
about Rs. 10,000 crores including exports and is
expected
 to grow at a CAGR of approximate 25% in the next
few years.
Competitiveness of Indian
Consultancy Exports
 • International firms are larger in size and operate across
countries which give them market access to these countries
and also the opportunity to tap the market for consulting
business.However Indian consulting organisations are
growing with great pace to compete with international
organisations
 • Local presence in the countries benefits multinational
organisations in liaisoning with cliente in these countries
with sustained business development resulting better
prospecting record with
 large expenditure on business development when compared
to Indian firms who largely
 depend on proactive business development in these
countries at low business development
 cost.
Drivers for Export Consulting
Services

 The demand for consulting services tends

to increase with the economic development
of the country.
 The requirement for consultancy services
stems from a diverse range of clients
largely governed by the large corporate
sector and the Government in various
forms, viz,
 country, institutions, bilateral / multilateral
agencies
Management consultancy

 Types of Consultancy Organisations

 • Since the origin of consultancy, the firms have been
characterized by diverse functional areas
 such as engineering, accounting, law, or banking.
Consulting organizations are generally
 classified as Management consultancy organizations,
Engineering consultancy organizations
 and Others which include Legal consultancy
organizations, Socio Economic consultancy
 organizations and Financial consultancy organizations
TIPS FOR EXPORTER AFTER
SELECTING SERVICE SECTOR
AS A FIELD OF EXPORTS
 With the growing competition and technology change regularly
now-a-days, there is a need of comprehensive strategy and follow-
up for entering in exports market. The following are some of the
measures for successful exporters:

 STRATEGY
 In order to be successful in exporting one must research its
markets. No one should ever try to tackle every market at once.
Many enthusiastic persons bitten by the export bug fail because
they bite off more than they can chew. Overseas strategy for
services must be carefully considered. All services must be
efficiently planned. They must be processed with due regard to the
need of the export markets.
 SELLING KNOWS HOW
 One should concentrate on making ‘own brand’ of theirservices ,
which is much demanded by buyers in oversea
 FAST DELIVERY OF SERVICES

 Services must be delivered as per the time framed. Late executions of services are not
always the exporter’s fault. But such difficulties can invariably be overcome, and
anyone contemplating entering export for the first time must be determined to let
nothing stand in the way of-fast and efficient execution of services . In most of the
cases person rendering the service is himself responsible for timely delivery unlike
physical export and hence this must be ensured.

 PROPER COMMUNICATION

 Communication internal and external must be far-reaching and speedy. Good
communication is vital in export of services. Failure to reply promptly to letters, using
sea mail to answer airmail letters are everyday errors and speed and timely action is
essence of export communication.

 FOLLOW UPS AND FEED BACKS

 Follow up and feed back should be well taken care in the service exports and with the
growing competition, customer satisfaction should be given upmost priority. After
execution of services also, the exporter should attain the feedback of the services he
has rendered so that in case of any improvement is required in further orders can be
attended
Export services
 Advertising Agency’s Services
 Airport Services
 Air Travel Agent’s Services
 Architect’s Services
 Authorised Service Station Services
 Management Consultant’s Services
 Manpower Recruitment or Supply
Agency’s services
 Market Research Agency’s Services
Banking and other financial
services
 As per section 65(12), “banking and other financial services” means –
 (a) the following services provided by a banking company or a financial institution
including a non-banking financial company or any other body corporate or commercial
concern, namely –
 i. Financial leasing services including equipment leasing and hire-purchase
 ii. Credit card services
 iii. Merchant banking services
 iv. Securities and foreign exchange (forex) broking
 v. Asset management including portfolio management, all forms of fund
management, pension fund management, custodial, depository and trust services, but
does not include cash management
 vi. Advisory and other auxiliary financial services including investment and portfolio
research and advice, advice on mergers and acquisitions and advice on corporate
restructuring and strategy
 vii. Provision and transfer of information and data processing and
 viii. Other financial services namely, lending; issue of pay order, demand draft,
cheque, letter of credit and bill of exchange; providing bank guarantee, over draft
facility, bill discounting facility, safe deposit locker, safe vaults; operation of bank
accounts.
 (b) foreign exchange broking provided by a foreign exchange broker other than those
covered under sub-clause (a).
 [clause (viii) added by Finance (No. 2) Act, 2004 w.e.f. 10-9-2004]
 Beauty Treatment Services
 Broadcasting services
 Credit Rating Agency’s Services
 Courier Services
 Consulting Engineer’s Services
 Event Management Services
 Franchise Services-
Some well known examples of
franchise are – Coca-Cola, Pepsi, NIIT,
Aptech, McDonald etc.
 Business Auxiliary Service
• promotion or marketing or sale of goods produced or provided by or belonging to the client;
or
• promotion or marketing of service provided by the client; or
• any customer care service provided on behalf of the client; or
• procurement of goods or services, which are inputs for the client; Explanation - For the
removal of doubts, it is hereby declared that for the purposes of this sub-clause, "inputs"
means all goods or services intended for use by the client or [This clause was inserted
w.e.f. 10-9-2004. The explanation has been inserted w.e.f. 16-6-2005]
• production or processing of goods for, or on behalf of, the client [This clause was inserted
w.e.f. 10-9-2004. It was amended w.e.f. 16-6-2005. Words during the period 10-9-2004
upto 16-6-2005 were –‘production of goods on behalf of the client’]; or
As per section 65(19), ‘business auxiliary service’ means any service in relation to —
• provision of service on behalf of the client; [This clause was inserted w.e.f. 10-9-2004]. or
• a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as
billing, issue or collection or recovery of cheques, payments, maintenance of accounts and
remittance, inventory management, evaluation or development of prospective customer or
vendor, public relation services, management or supervision,
Commission agent services
 (a) "Commission agent" means any person who acts
on behalf of another person and causes sale or
purchase of goods, or provision or receipt of services,
for a consideration, and includes any person who,
while acting on behalf of another person—
 (i) deals with goods or services or documents of title
to such goods or services; or
 (ii) collects payment of sale price of such goods or
services; or
 (iii) guarantees for collection or payment for such
goods or services; or
 (iv) undertakes any activities relating to such sale or
purchase of such goods or services.
INFORMATION TECHNOLOGY
SERVICES
(b) ‘Information Technology Service’ means
any service in relation to designing,
developing or maintaining of computer
software, or computerized data processing
or system networking, or any other service
primarily in relation to operation of
computer systems [Explanation to section
65(19)] [The definition of ‘commission
agent’ has been inserted w.e.f. 16-6-2005].