In the current era of globalization, each organization, either manufacturing or service, is starving to improve the competitive dimensions. As the customers have become more demanding in terms of price, quality and delivery, organizations must use worldclass practices in their business functions to get maximum output. The Indian service sector is gaining more and more interest as the connected manufacturing sector is expanding. Many techniques are being used by the service sectors whose origins are in automanufacturing industries. This research article attempts to identify the challenges, improvement practices, strategies and improved performance measures considering the application of lean principles in service organizations. For this purpose, service industries working in the Gujarat state have been selected as sample, and an exploratory analysis has been conducted. The results show moderate application of lean principles in the business functions of the service sector. This can be further enriched by developing a set of guidelines and models to help them implement lean principles and associated practices.