A controller that is in communication with the plurality of network nodes establishes a service path for a service chain defined by an ordered sequence of service functions to be performed at respective ones of one or more of the plurality of network nodes. The controller assigns a predetermined service path identifier and a predetermined service index value for a segment of the service chain that includes only one or more network nodes not capable of decapsulating packets to extract a network service header so as to designate the one or more network nodes determined not capable of decapsulating packets to extract the network service header as a single service hop segment in the service chain.