Why Service-Based Startups Are More Successful In India?

Vibhavari Madki Vibhavari Madki
Dec 26, 2020 5 min read
Why Service-Based Startups Are More Successful In India?

Startups are establishing their place in the market in India, this is mainly because many of the new ideas have worked flawlessly for consumers, that is why India is one of the fastest-growing startup ecosystems. The Service-based Startups are ruling the market as compared to the product-based ones. For example startups like Flipkart, Quikr, Sulekha, Ola, Yatra and POPxo.

India is the fastest-growing and the third-largest startup ecosystem after the US and the UK. The liberated economies and affordable technologies have made it possible for the new age entrepreneur to compete with the already established players.

The service sector is the fastest-growing sector in India, contributing significantly to the countryโ€™s GDP growth, employment, trade, and investment. In the Indian service sector, e-commerce takes the major share of the pie, with Morgan Stanley Research report estimating Indiaโ€™s e-commerce market to increase from $102 billion to $119 billion by 2020.

On the other hand, there are not many success stories when it comes to product-based startups. A few names that occur to us and which have made some inroads into the Indian startup share, are Micromax Informatics, a leading consumer electronics company. Gecko, a device that works as a key finder and Goqii, a fitness tracking wearable.

Growth in number of Startups Registered in India
Growth in number of Startups Registered in India

Why Service-Based Startups?

Indian Startups have a greater advantage of service based startups. Here are some of the reasons why service-based startups are more successful and survive longer in India.

Low Capital Costs

Manufacturing and selling a physical product involve a heavy capital investment, time, and energy. It usually requires taking a bank loan or securing funding from investors.

On the other hand, there are little to no startup, overhead or manufacturing costs involved in service-based startups. A founder can start a setup (from his home or garage), with a few or no employees, and build his reputation through word of mouth marketing. His small set-up means he doesnโ€™t need a huge capital infusion, he can even bootstrap his business.

Faster to Launch

Service-based startups can get a business off the ground and start earning revenues earlier. All they need to do is define their service, find customers, listen to their requirements and start delivering the service. A product-based startup takes a lot of time and resources to conceptualize, design and create the product.

Lower Business Risk

Every business is prone to some risk, however, service industry startups face fewer risks. Customer who's paying for a service usually knows his requirement, hence there is no guesswork involved, and hence, lower risk. You are selling the service and billing for a specific skill/expertise you already own. And, in service businesses, customers are committed to paying before you even start working.

Flexibility and Adaptability

Furthermore, a service business is much more flexible and adaptable. Not only you can work from wherever you want, but you can easily make adjustments and customize your service as per an individual clientโ€™s needs. For example, If your client isnโ€™t too happy with his website or campaign, you can make changes according to their feedback in real-time. Products are much more difficult to improve or modify, as they may need testing, licensing and re-manufacturing.

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How Indian Startup Culture Differs From Others

With the emerging business opportunities in India, the biggest startups in the word are no longer just in America or China. India has now become a leading global startup hub.

The number of startups in India has grown from 7,000 in 2008 to 50,000 according to the latest report by KPMG. The primary difference between Global and Indian startups is funding. Itโ€™s quite easy to get going in India, but the problem lies in the later stages where funding becomes more troublesome leading companies with no choice but to get international venture investors.

successful startups in India
Successful Service-based Startups in India

Some Successful Service-Based Startups in India


Zomato is an online restaurant search and discovery app, providing in-depth information of about 1 million restaurants across 23 countries. It is one of the successful startups in India. It is used by consumers globally to discover good food, rate, and review restaurants, as well as create personal networks of fellow food enthusiasts for trusted recommendations. It was launched in 2008 covering over 331,200 restaurants in 19 countries.

In addition to restaurant search and discovery, Zomato has expanded its offering to include transactions like Online Ordering, Table Reservations, and Point-of-Sale system, creating cutting-edge technology to connect restaurant businesses and customers in ways that will revolutionize the restaurant industry.


Practo, a health tech company with the motto of #DoGreat is prospering greatly with 2,00,000 doctors and 20 million patients across the world have kick-started its journey in the year 2008 from Bengaluru by two NITians Shashank and Abhinav Lal.

Practo is the perfect example of โ€œIn the middle of difficulty lies opportunityโ€ because the idea of PRACTO was initiated from the difficulties Shashank faced concerning his fatherโ€™s health. It is the successful startup in India.

Practo, a product of Naabo solutions, became the Home for health by its hassle-free solutions for doctor appointments, delivery of medicine at the doorstep, online consultation with their registered doctors along with online appointment booking software for doctors to manage their clinics.


Rentomojo was started with the idea of providing online rental services for furniture (for 3 months) in 2014. It was started with the intention of providing consumers with the ever-evolving style without the actual investment costs for furniture.

It was funded by IDG Ventures India and Accel partners initially and in 2017, the company gained $10 million Series B funding from Bain Capital Ventures and Renaud Laplanche.

Rentomojo expanded its business to renting of two-wheelers and appliances in 8 cities with an option of Rent-to-own model by the year 2018. Rentomojo is offering new features to its customers like cleaning annually, free maintenance with the subscription, swap products.


Relatively, the success rate of product-based companies is very low than service-based companies in India.

The ideas of some of the top Indian startups are quite out of the ordinary. If one wants to create the most profitable business in India, they really need to think outside of the box. Indian startups have to keep up with their competition. Their startup ideas should be unique, which always attracts customers and brings forth profit.

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