Business services are the non-physical activities that support a business yet do not create or deliver any tangible products. They include IT, accounting and marketing. The industry has also expanded to include services related to employee quality of life such as daycare and fitness facilities. Business service providers may offer a single service or a suite of services customized to fit the needs of a specific business.

The concept of business services has gained in popularity with the growing acceptance of outsourcing and the need for businesses to focus on core activities. In the past, many companies provided these services internally; however, new communication technologies and infrastructure have enabled businesses to partner with external service providers and gain access to their expertise. This is a significant advantage for firms with limited resources and high output variability.

Outsourcing business services is an effective strategy to help a company reduce costs and improve efficiency. Business services providers can provide specialized expertise that a company may not have in-house, which can help them better understand and meet customer requirements. They can also handle the time-consuming and routine aspects of a business that free up employees to focus on other tasks that require more skills and knowledge.

Another benefit of partnering with external business service providers is their ability to respond quickly and efficiently to changing business requirements. They can scale up or down production levels to match demand, and they often have lower overhead costs than in-house operations. They can also provide a wide range of value-added services such as packaging, warehousing, transportation and waste management.

In addition, business service providers can offer flexibility and cost-effectiveness by providing a wide range of services in different markets and utilizing their international reach and local market knowledge. They can also provide a higher level of security and confidentiality than an internal operation by requiring employees to sign strict contracts. This is particularly important in the case of business-to-business service providers.

The success of a service business is often determined by its ability to create a competitive advantage based on experience, quality or convenience. Service business managers must change the way they think about product development to a design thinking approach, where they focus on creating and delivering experiences that customers will find attractive. This shift in perspective can be difficult for some traditional managers, but it is necessary to compete effectively.

A successful business services organization must also ensure that the people who participate in operational processes are well trained, responsive and able to adapt to rapid changes. In many cases, this is the most important component of organizational agility. This can be achieved through a service-oriented architecture that introduces the concept of business service layer abstraction and orchestration. These services are designed to be flexible, modular and composable to facilitate dynamic re-modeling of automated business logic in response to change. This enables the business to remain agile and competitive in today’s global marketplace.