Service industry is that part of the economy that creates services rather than tangible objects. Service industries include banking, communications, wholesale and retail trade, all professional services like engineering, computer software development, medicine non profit economic activity, all consumer activities and all governments services including defence and administration of justice. A service dominated industry is common in developed countries.
Service industry has grown tremendously because goods production has become increasingly mechanized. The service industry does not create anything, the individuals hired simply perform tasks. In the US, service industry accounts for the 80 percent of the employment. The industrial service is made up of two firms: Equipment Based Service Firms and People Based Service Firms.
The Equipment Based Service Firms utilises machinery and other forms of technology to perform the tasks required by customers. Most of the time, the machinery used is operated and monitored by unskilled labourers. For example the dry cleaning services. However, not all equipment based service firms are run by unskilled labour. There are many high end organizations that require educated employees to carry out their mission. These include the airline carriers and the information technology firms. There are other equipment based services firms that require no employees at all. These firms earn money and deliver services to customers autonomously like the vending machines enterprise.
People Based Services firms do not rely on machinery to deliver services. It’s the professionals delivering the services and the knowledge that he maintains allows the tasks to be carried out. People Based Services firms may also require unskilled labourers like the security firms. Other people based companies require employees who have high level of education like the accounting firms, doctors’ offices and law firms.
- Information providing critical data for internal groups and external customers who can use it to develop their operations.
- Problem solving assisting internal groups and external customers to solve problems.
- Sales is supporting sales activities and marketing.
- Support deals with quick replacing of defective parts of customers.
Service industries can be placed in different categories depending on its divisions, its industries and the type of jobs within them. The general category of the service division includes a wide variety of industries but can be categorized simply into consumer oriented (providing services direct to a consumer), business oriented (providing services to another business directly.) or mixed (providing services to both individuals and businesses).
Secondly, the service division activities can be described depending on their economic activities like physical, intellectual, aesthetic and other experiential activities. Physical activities involve working with objects like landscaping, car repair or preparing meals. Intellectual activities involve providing education or training like in the university. The aesthetic activities include providing consumers with artistic or visual experiences like in the museums, theatres and art shows. Finally, the industry service can be categorized by what is transformed through the service. A service can transform a physical object. This occurs when something is repaired, altered or improved.