How Informal Markets Can Support The Mobile Service Sector

Posted on February 4, 2013 in Business and Economy

By Harshal Mantri:

The mobile service sector is a relatively new area and can explain how the informal market provides services to the customer at cheaper prices than formal markets. Many local repairing shops in each city repair mobiles at cheaper rates. The question remains “How do they learn this occupation?” Do they take a formal training or practice “Learning by doing”? In addition, when a new technology comes out in the market how do they update themselves?

mobile service

India has seen a significant boom in the number of mobile phone subscribers in the last decade alone. Various multinationals have targeted the 1.2 billion population of India as a very important market and adapted to suit it better. India has offered a large market for all categories of mobile phones right from basic low cost phones to high-end smart phones. With over 900 million mobile subscribers already and one of the lowest user charges rate (lower even than China), India has succeeded in increasing its mobile reach and offers a great opportunity for all aspects of our economy, governance and other fields. One of the important corollaries to this phenomenal growth is its contribution to the growth of an industry supporting the servicing and maintenance of the ever-growing number of handsets. Apart from the formal market of the handset-producing firms, another important contribution to this sector is through the informal market.

In spite of the wide range of diversity in formal market products that have already established their service providers, the consumer chooses the informal market for servicing of their mobile, which is a much cheaper option than the established formal service provider is. The reason for the low costs in servicing at a local store who works informally lies in the fact that they do not pass through the formal education or standardized learning of technical knowledge.

According to my preliminary study in this area, I have concluded that there are many institutes providing education related to these services. I have observed it on small scale and one can probe this even further. Many institutes in the city of Pune provide diploma certificate in mobile services and repair. The course structure is more practical than theoretical in nature. Few institutes do provide placement opportunities in formal sector and give training to run their own business. The education eligibility for this course is 10th or 12th pass according to the institute’s criteria. In Pune, about ten such mobile training institutes conduct around three to six month courses with valid certification at institute level. Students also get placement in the formal servicing sector such as Nokia, Samsung, etc. This informal market also gives rise to an external market that provides cheap products reducing the cost of servicing. The manufacturer either purchases it from China or produces it at cheaper cost in the domestic market.

This training also allows them to start their own business, the presence of the informal market affects the formal market as they are cheaper service providers and customers tend to prefer this market. Also, customers with low end mobile phones are larger in number than those with high end phones, formal service providers are only available for the big companies such as Nokia, Samsung, Sony Ericsson, Spice, Blackberry, LG, Spice, Videocon and Motorola. But companies such as Maxx mobiles, Fly mobiles, Karbonn Mobiles, Micromax, Onida, G’Five, Red, HTC, Airphone, Maxphone and Philips which are launching new mobile phones every day, do not have their formal service provider in India. Thus, they have no other option than to go the route of Informal service providers. Informal market not only provide cheaper services to low end mobiles as well as high end mobiles but also play a vital role in providing services to such segment which do not have their own formal service centre.