For some observers, the dramatic growth of the services sector in India reflects rapid strides made by educated professionals. Some others see it as the expansion of an employer of last resort. Given this heterogeneity, the object of the paper is to analyze the nature of employment being created in the different sub-sectors of services, relative to the industrial sector. The nature of employment is defined to include educational requirements and quality, where the latter comprises wages, job security and social protection. Using different econometric models to analyse household survey data from India in 1993-94 and 2004-05, we find the following. First, sub-sectors of services are generally either ‘good’ or ‘bad’ employers. Second, service sub-sectors with low educational requirements have low overall quality of employment, and vice-versa. Moreover, employment expansion appears to be more in sub-sectors where educational requirements and quality of employment is low.