Business services are activities that assist businesses but do not deliver a tangible commodity. They provide valuable support to firms and are vital to the operation of a company. They are often intangible and hard to define, but they include things such as information technology services that help a company keep its computer systems up and running. They also can include consulting services that advise companies about strategic issues. These types of services are sometimes referred to as professional services.
The service industry accounts for a large portion of the economy and is growing rapidly. Companies of all sizes rely on business services to function, especially large firms that have a variety of internal departments. For example, a construction firm might outsource some of its work to a third-party contractor, which saves the company money and provides it with access to specialized expertise it might not have in house. In addition, many companies contract with outside vendors to perform a wide range of business services, such as marketing and human resources support.
In addition to saving money, outsourcing business services makes sense because it allows a company to focus on its core competencies and eliminates the need for it to hire or train employees in a specific area. This frees up the company’s time and energy to invest in new products or markets. In addition, external providers can scale up or down their services in response to changing business needs, which is a helpful feature for companies with seasonal output fluctuations.
As with product companies, the success of a service business depends on its ability to offer value to a target audience. The way to do that is to understand the customer’s needs and desires, which requires a shift in thinking for managers from the perspective of focusing on features customers will value to concentrating on their experiences with a service brand.
Some examples of business services are a cleaning service that cleans a company’s office, an IT consultant who helps a company align its technology assets with its corporate goals and a third-party logistics company that handles shipping for online sales. Other types of business services include a real estate service that helps businesses find appropriate workspace and a landscaping firm that designs the grounds for a company’s headquarters.
Companies that offer business-to-business services are a critical part of the global economy. They include the delivery of utilities such as electricity and gas, insurance services that protect businesses against liability and loss, transportation and warehousing services and even waste management services. These are essential to a company’s operations and enable it to compete in the global marketplace. They are also a key driver of economic growth in many developing countries. The world’s largest economies are built on a strong service sector. This is a good reason why the United States continues to invest in building its service economy, including education, research and development, infrastructure, technology and innovation. These efforts are paying off as evidenced by the country’s recent surge in productivity and exports.