Business services are activities that help companies but don’t produce a tangible product. These activities often involve people and can include things like accounting, legal support, consulting, janitorial services and human resources. They’re a big part of the economy, particularly in Europe, where they account for 11% of GDP. Business services are also a vital part of the modern economy, allowing firms to offer new combinations of goods and services, which drive innovation and growth.

The business service industry is a highly specialized and complex sector that’s rapidly changing and evolving. Managers are facing a host of new challenges, from new technologies to changes in the structure of the workforce. As a result, there’s still much that’s unknown about how best to manage and develop this important sector.

There are four broad categories of business services: operational, financial, knowledge-based and social. The success of a business service depends more on how well it gets all four of these areas right than on any one category. For example, a service that’s fast and convenient to use but offers poor quality might fail despite the fact that it’s cheap. A company that’s slow, dependable and cost-effective will be more likely to succeed.

A successful business must also be capable of delivering a consistent experience, whether that experience is delivered face to face, online or over the phone. This means that a company must build systems for managing customer interactions, quoting work, scheduling jobs, billing clients and getting paid. It must also develop processes for training employees and standardizing work procedures.

Another major challenge is balancing the competitive autonomy of service models with the need for shared services to provide value to all business units. To do this, a strong leader is required who can exert strong influence over the revenue-generating line managers. Without strong leadership, it’s easy for revenue-generating managers to overrule shared services management and undermine the overall performance of the system.

While some business services are offered for profit, others are provided voluntarily to promote social good. This type of service, known as social services, is funded by taxes and charitable contributions. It may be performed by volunteers or provided through a government agency.

Finally, a business must be able to adapt quickly to change and new opportunities. It’s crucial for a service business to know when to invest in new technology and how to implement it effectively. This is especially true for a knowledge-based service that relies on constant learning and updating to keep pace with developments in its field. It’s also important for a knowledge-based business to understand the needs and expectations of its customers. A business that fails to do this will struggle to compete in a highly competitive and dynamic environment. The more a business knows about its customers, the better it can serve them.