Business services is a large sector of the economy. It includes companies such as IT, accounting, marketing, staffing, security, and waste management. In the US alone, it has about 420,000 single- or multi-site companies with combined annual revenues of about $950 billion.
Unlike products, which are physical assets, service businesses provide value that does not have a tangible form. A service company provides support, expertise or convenience for a fee. These activities can be performed in person or remotely. Examples include a consulting firm that advises clients on strategies for growth, a computer software company that provides an IT infrastructure platform or a security services firm that protects a headquarters.
Companies often outsource their services to reduce expenses, improve productivity and focus on core operations. For example, they may hire a business travel agency to arrange corporate trips and handle logistics for the employees who attend them. The outsourcing trend has also led to the development of remote work programs that allow employees to complete some of their tasks from home or other locations away from the office.
Running a successful business service company requires managers to make important shifts in their thinking. They must understand that their customers don’t view service as a product, but as an experience. In addition, they must be able to design their offerings to meet customer needs and desires in ways that differentiate them from competitors. This approach is known as service-based business design.