Business services are intangible services that support the operations of businesses and organizations. These include services related to accounting, finance, human resources, IT, advertising and marketing, warehousing and logistics, waste management, and shipping. These services are vital for a company to be successful. They help businesses save time and money by providing a variety of essential functions that enable them to focus on their core business.
A business services industry analysis indicates that the sector generates about $950 billion in revenue and provides approximately 420,000 jobs. It is part of the service-providing industries supersector group, which includes professional and technical services, education, health care and social assistance, leisure and hospitality, transportation, and utilities.
According to experts, there is a high demand for business services in the global economy. Many businesses are outsourcing their business services to lower costs and increase efficiency. For instance, a company may hire an outside firm to create a website for its customers. This can be considered a business service because it allows the company to focus on its core activities while leaving noncore tasks to a third party.
The business services industry is a major source of employment in the United States, with a total of about 420,000 single-location or multi-site companies. This industry accounts for about 9.8% of the nation’s GDP. This industry is also responsible for about 40% of the country’s exports.
While the value of goods and commodities is often seen as a measure of economic development, the value of business services is equally important. For example, a factory needs banking and insurance services to have access to capital; it requires warehousing, transportation and communication services to get its raw materials and finished products from the producer to the consumer; and it requires staffing and consulting services to manage its employees and processes.
In addition, the quality of a business service can be affected by the inputs of its customers. For example, an architectural firm’s client may explain their goals well or poorly and this can influence the effectiveness of the design process. Likewise, a customer who dithers while ordering at a fast-food counter can make the service less fast for everyone else in line.
Another distinguishing feature of business services is that they are not consumed directly but are produced and delivered at the same time as they are performed. Therefore, they can be considered inseparable and there is no need to store them as inventory like tangible goods do. The intangible nature of business services also makes them more difficult to analyze than goods and commodities. However, the EU’s Internal Market legislation and policy actions are intended to remove barriers that hinder business services growth. For example, the Services Directive allows companies to operate across EU borders more easily and this will benefit the overall business services industry. This is expected to increase competitiveness, improve productivity and stimulate growth. This will ultimately lead to job creation in the business services industry.