Business services are the activities a company employs to help itself operate more efficiently. The business services sector includes a wide range of activities, from the simple delivery of goods to a customer to providing consulting and information about a particular subject. Businesses that specialize in offering such services to other companies are referred to as service-based businesses. These activities can help a business to become more competitive by allowing it to focus on its core capabilities while outsourcing non-core functions.
Service-based businesses have their own distinct set of challenges, which are different from those faced by product-oriented businesses. For example, service-based businesses must create and deliver experiences that customers value and compete against a host of competitors who also provide those experiences. In such a marketplace, the success of a service-based business can come down to whether or not it gets four critical elements right.
Services are a vital part of the economy, representing about one-third of the United States’ gross domestic product. They are the tertiary sector of economic theory, after the primary and secondary sectors that produce and sell tangible goods. A number of businesses that are considered business services include airlines, banks, software firms, and restaurants. The service industry is growing and changing fast, transforming itself as new technologies enable it to offer more sophisticated products and services.
For instance, warehousing and logistics services have become highly valued because they allow companies to streamline the flow of materials. These services have helped improve the efficiency of supply chains by integrating inventory management and shipping with distribution, order processing, and other logistics functions. They also help companies meet regulatory and environmental requirements by performing tasks such as tracking shipments and managing waste and recycling programs.
Another common type of business service is software services, which enhance the functionality of technological devices like computers and mobile phones. These services can be used to improve security and reduce the risk of viruses, make applications more user-friendly, or upgrade systems with the latest features. They are a popular and cost-effective way for a business to improve productivity.
Other types of business services are less visible to the public, such as office services, which provide a wide variety of support functions in an organization including cleaning, food preparation, mail and messenger services, and IT support. They can also include child care services and in-office day cares, which help employees save time and money while maintaining a work-life balance. They are a key element of the broader concept of “servitisation” in the European economy, which is the process of building service-based economies. The EU has undertaken a number of policy initiatives to promote the competitiveness of this growing sector of its economy. These efforts include easing regulation, lowering barriers to entry, and encouraging the development of new combinations of goods and services. In the short term, this will likely increase the profitability of many businesses in Europe. But, in the long run, achieving this goal will require more than policy action. It will also require effective leadership from revenue-generating line managers who must be willing to share their power with shared service leaders.