Composition of the Services Sector

The tertiary sector is not one uniform activity; it is a wide umbrella covering a number of distinct sub-sectors, each performing a different function in the economy.

Trade — wholesale and retail trade — links producers to consumers by buying, storing and distributing goods, and remains one of the largest employers within services, especially in its informal, small-shop form.

Transport, storage and communication move goods, people and information across space. This includes road, rail, air and water transport, warehousing, postal services and — increasingly — telecommunications and the internet, which have become indispensable to every other branch of the economy.

Banking, insurance and other financial services mobilise the savings of households and firms and channel them into productive investment, while insurance pools and spreads risk that individual producers or households could not bear alone. Related activities — capital markets, mutual funds and, more recently, digital and mobile-based financial services — fall under the same broad head.

Real estate and business services cover the buying, selling, renting and developing of property, along with professional and business support services such as legal, accounting, consulting and human-resource services that firms increasingly outsource rather than perform in-house.

Public administration and defence are services rendered by the government itself — law and order, justice, civil administration and national defence — financed out of public revenue rather than sold in a market.

Education, health and other social/community services directly build human capital and welfare; tourism and hospitality (hotels, restaurants, travel) have grown rapidly with rising incomes and better connectivity; and Information Technology and IT-enabled Services (IT/ITeS) — software development, business process outsourcing, and more recently data analytics, fintech and digital platforms — form the most talked-about modern addition to this list, discussed separately later in this chapter.

The table below is only an illustrative summary of how these sub-sectors are usually grouped; it is not meant to represent official weights.