India’s Services Sector Sees Strong Growth in January, Hiring Surges: HSBC

India's services business activity expanded sharply in January this year, though the growth rate was slower than December, according to the HSBC India PMI survey released on Wednesday.

Several services companies linked output growth to favorable demand conditions, new business wins, and investment in technology. However, a few firms suggested that activity levels at their units were constrained by a fall in customer numbers, the survey states.

At 56.5 in January, the seasonally adjusted HSBC India Services PMI Business Activity Index recorded a sharp rate of expansion. However, the headline figure was down from 59.3 in December, the survey stated.
The rate of job creation accelerated from December and was among the fastest seen since data collection started in December 2005, it pointed out.

Overall, new business rose sharply. Growth was said to be driven by high demand and efforts to provide better prices than competitors. Intense competition was cited as limiting growth.

Contrary to the pattern for new orders overall, international sales expanded more rapidly. Respondents cited gains from clients in Asia, Europe, the Middle East, and the Americas, the survey said.

Service providers in India were optimistic about an increase in business activity over the next 12 months. Qualitative data indicated that advertising, attempts to price competitively, and new client enquiries were some of the factors cited as underpinning positive forecasts. While the level of optimism did decline to a three-month low, it was broadly in line with the trend for the series.

Service providers began to hire extra staff during the early part of the last fiscal quarter, with improvements in new business intakes and rising capacity pressures.

The rate of inflation was little changed from that seen around the turn of the year, and so remained above its long-run average. Rising cost burdens and resilient demand contributed to further increases in prices charged for the provision of Indian services at the start of 2025. Having accelerated from December, the rate of charge inflation was marked and above its trend, the survey added.