What Is a Service-Oriented Business?

A service-oriented business is one that provides a service to its clients or customers. Businesses and other enterprises generally are classified by whether they provide goods or services. Those that provide goods include farms, mines and manufacturers. Banks, retail stores and communications media are all examples of service-oriented businesses. Such businesses form the service industry, which represents a major sector of the economy in developed nations.

Most analysts classify economic, or money-generating, systems by how they operate. Systems based on natural resources, such as agriculture, logging and mining, are called the primary sector, used in phrases such as “primary sector jobs.” Manufacturing businesses such as factories are considered the secondary sector, and the service industry is sometimes called the tertiary sector. A simpler division is the commonly heard phrase “goods and services.” In this analysis, the first two economic sectors represent “goods,” and everything else is a service.

By any reckoning, service-oriented businesses contribute to a major portion of the global economy. By some estimates, nearly one-third of all jobs are part of the service industry. Income generated by these businesses create as much as three-fifths of the world’s wealth in any given year. In developed nations such as the United States, Japan and most of Europe, service-oriented businesses compose the majority of business enterprises. In developing nations, primary- and secondary-sector businesses generally are more prevalent.

The definition of a service-oriented business is very broad. Service-oriented businesses include restaurants and groceries, as well as retail stores of every type. The transportation, travel and hospitality industries also are vital services that allow people and cargo to go anywhere in the world. Healthcare is a service-oriented business, as are the industries that maintain buildings and other public infrastructure. Information services, including software companies and Internet-based businesses, have become such an important part of the service industry that they sometimes are considered their own economic sector.

Some parts of the service industry do not qualify as a “business,” such as public services — police, firefighters or even government, for example. Other industries, such as healthcare or prisons, vary by country. In some countries, these are managed by government agencies, and in other countries, they form part of the service-oriented business community. In the 21st century, the question of which services should be publicly or privately funded has become the subject of lively debate. When public services are reduced by financially struggling governments, they sometimes are taken over by for-profit businesses, a change that is controversial to many people.