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Hyderabad: Even as Andhra Pradesh IT minister Lokesh and his Karnataka counterpart Priyank Kharge take swipe at each other over attracting major investments, Telangana has quietly overtaken Karnataka in terms of percentage of employees working in the services sector.According to a Niti Aayog report, 34.8 per cent of the workforce in Telangana are employed in the service sector, while only 32.9 per cent of Karnataka’s working population are in the tertiary sector. This indicates greater urbanisation in Telangana compared to Karnataka as experts see a strong correlation between the urbanisation and service sector. Kerala topped the south with 48.5 per cent service jobs, followed by Tamil Nadu (37.9 per cent), Telangana (34.8 per cent), Karnataka (32.9 per cent) and Andhra Pradesh (31.8 per cent). The report notes that while Telangana and Karnataka are global IT hubs, only about one-third of their workforce is employed in services (33-34 per cent), pointing to a productivity-led growth model where output expands faster than job creation.Contrary to the general perception about the IT jobs dominating the service sector, the report shows that trade, transport, and education employ over 50 per cent people in the service sector in Telangana. To expand employment opportunities in Telangana, the report recommends leveraging the state’s strengths in information and communication technologies by promoting tier-2 city hubs such as Warangal and Karimnagar, expanding formal jobs in Hyderabad’s technology sector, enhancing skilling initiatives through the Telangana Academy for Skill and Knowledge (TASK), and using the state’s logistics network and the Hyderabad–Warangal Industrial Corridor to boost related employment avenues.Emerging sectors such as information technology, finance, healthcare, and professional services show higher wage potential and employment elasticity, but their scale is still limited. This reflects a key imbalance in India’s services economy — traditional, low-value activities employ most workers, while high-value modern services contribute disproportionately to productivity and income growth.States such as Telangana, Maharashtra, Tamil Nadu, and Karnataka have developed high-productivity service hubs, while states like Bihar and Madhya Pradesh remain concentrated in low-value segments. The concentration of IT, professional, and financial services in southern and western states is deepening. Karnataka and Telangana continue to lead in IT and information services, while Maharashtra and Tamil Nadu dominate in finance and professional services. These sub-sectors generate significant Gross State Value Added (GSVA) but employ a smaller share of workers due to their skill-intensive nature.The report also points to persistent geographic disparities. States like Maharashtra, Tamil Nadu, and Uttar Pradesh balance both scale and value addition, while Bihar, Madhya Pradesh, and Gujarat continue to host large numbers of low-productivity jobs. In contrast, knowledge-driven states such as Telangana and Karnataka generate high economic output with relatively limited employment.SERVICE JOBS DISTRIBUTIONWholesale and retail trade: 28.2%Transportation and storage: 16.1%Information and communication: 12%Education: 9.3%Public administration, defence: 5.9%Other services: 5.7%Accommodation and food: 5%Financial and insurance 4.9%Activities of households: 4.5%Human health and social work: 4.3%Professional, scientific, technical: 1.6%Real estate: 1.3%Administrative and support services: 1.1%Arts, entertainment, recreation: 0.3%Source: Niti Aayog
