Business services are activities that benefit companies without delivering a physical product. These services include a wide variety of tasks and activities that help businesses operate efficiently, such as marketing, accounting and shipping. They can also assist with production, safety and cost reduction. In addition, these services can improve employee productivity and morale.
Many of these activities are performed by independent service providers, who may be located anywhere in the world. This makes it easy for businesses to outsource their non-core activities, which can reduce overhead and costs while freeing up employees to focus on core competencies. In addition to traditional outsourcing, businesses can use business services to meet specific needs, such as a temporary worker for a special project or training a new hire.
The concept of business services is not a well-defined term, and the definition may vary depending on who you ask. Most commonly, it refers to services that are primarily sold to organizations rather than individuals. This includes technical services like engineering and architecture, as well as financial services and management consulting. It also includes utility services like electricity and water and a range of miscellaneous support services for businesses such as warehouse and transportation.
A common business model involves using these services to enhance the value of a primary commodity good. For example, a restaurant provides food as its primary good, but it also offers other services such as ambience, table settings and wait staff to enhance the customer experience. This is often referred to as service-based or experience-driven economics.
The four main components of business services are process, people, technology and information. A successful service business relies on all of these elements to attract and retain customers. For example, a fast-food chain must provide excellent service to attract customers, but it must be delivered in an efficient manner to prevent losing them to competitors that offer the same quality of goods and service at lower prices.
Unlike a physical product, which can be stored and re-used, services are intangible and can only be consumed at the time they are provided. This creates challenges for service companies because they can’t store and reuse a product in the same way as manufacturers. This also means that service companies need to design their processes and teams carefully in order to deliver a consistent and positive experience for customers.
For example, an architect’s ability to explain the purpose of a building to a client can make or break their business. Similarly, a customer who dithers at a fast-food counter can slow down the line for everyone behind them.
Business services are a large industry and contribute 11% to the European economy. They are growing rapidly, particularly in the’servitisation’ of the economy, where service-based business models are used to complement and add value to other sectors such as manufacturing. They are also playing a key role in the digital revolution and improving the competitiveness of the European Union.