Business services are activities that benefit companies without supplying them with physical products. These can be as diverse as courier services to deliver documents and invoices, or as complex as IT services to manage and improve systems and networks. Companies rely on these services for marketing, production, safety, cost and convenience purposes. In addition, outsourcing many of these tasks frees up internal employees to focus on more important matters.
The majority of business services are provided by businesses to other businesses. This type of service is known as business-to-business (B2B) and can include everything from warehousing to marketing and inter and intra-departmental communication. Many of these services can be categorized as not being tangible goods, which makes them difficult to market and compare against one another. As a result, it is often the case that a particular company develops an identity as a service provider that serves a specific segment of the industry.
In contrast, product-oriented companies can rely on the existence of a physical commodity as an anchor for their marketing and branding efforts. However, service-oriented businesses have to compete on other characteristics that are not readily apparent to customers, such as convenience, friendly interaction and the ability to tailor their offerings to customer needs.
Service businesses typically do not enjoy the economies of scale enjoyed by product-oriented businesses, because they cannot stock a service for future delivery. As a result, they have to be located close to the demand centers of their markets. This also limits the opportunity to provide a consistent level of service across multiple sites.