Business services are a wide range of activities that support the operation and management of a business, without generating tangible goods or services. They include information technology services like consulting, auditing and the provision of a help desk, which are usually documented in a service level agreement (SLA). This category also includes human resources services such as recruiting, training and HR management; and other professional services like accounting, legal advice and management consultancy.
A major component of the business services sector is outsourcing, which involves the contracting of a business function to an outside vendor. This can be a cost-effective way to access expertise and capabilities that are not available in-house, such as a complex IT infrastructure, or to cover the short-term or seasonal requirements of certain business functions. In many countries, the business services industry is a large contributor to GDP, especially in low-income regions where it is often the largest segment of the economy.
The four key components of a business services strategy are: strategy, structure, processes and culture. The success of a business services strategy is highly dependent on the alignment of these elements, as they all work together to create a value proposition that is unique in the marketplace.
In modern economic theory, most products are considered to fall between a pure commodity good and a business service, with the exception of utilities that actually deliver physical goods, such as water or electricity. Many business services are intangible and non-physical, such as the atmosphere of a restaurant or the wait staff in a dining room. Other intangibles are the business-to-business services such as advertising, marketing and sales outsourcing.
Typically, a service business is less expensive to operate than a manufacturing or trading business because there are fewer overhead costs. The primary source of revenue is from the sale of the service to its customer, which is often a corporate client. In a B2B environment, a service business is also likely to be more profitable than one that sells to consumers.
A common business-to-business model is the service company that operates a business-to-business ecommerce platform, such as Amazon Business. Another popular approach is the professional services firm that offers a range of consulting and advice to businesses, from a marketing consultant to an accountant. Other important business-to-business services include IT services such as software or cloud computing, telecommunications and logistics.
While some companies employ their own in-house service departments, most rely on third-party providers of business services. The most commonly used services are logistics, such as warehousing and shipping; IT; management consulting; and training. These providers are able to save time for the client by focusing on those areas where they have expertise and experience. They can also scale up or down their services in response to a change in the needs of the client, which is particularly important for a business that deals with seasonal demand. This enables the client to focus on its core operations while using its resources as efficiently as possible.
