The business services sector encompasses a broad range of activities that support companies without producing a tangible product. These include services such as insurance, cleaning and transportation. These services are vital to many countries, and contribute a significant share of their economy.
Unlike physical goods, which can be stored for future consumption, business services must be delivered at the moment of use. As a result, the cost and quality of a service can be significantly affected by the behavior of customers. For example, a customer who dithers at a fast-food counter can make the experience less fast for everyone behind him. This new form of business presents managers with a unique set of challenges.
Many businesses use external business services to reduce costs and improve productivity. These providers often have specialized expertise and experience that the company may not have in-house. Additionally, they can scale up or down in response to changing business needs.
The definition of business services varies widely, but includes everything from human resources to consulting and marketing. Some businesses operate on a fee-for-service basis, charging a fixed amount for each piece of work done. Others provide an ongoing subscription that gives them access to a certain range of services.
The business services industry is a major contributor to the EU economy and is undergoing a period of growth and innovation. The sector faces challenges such as low average productivity and persisting legal barriers, but new tools are being developed to address these problems.