The service industry provides intangible services rather than tangible goods, and includes businesses like restaurants, education, healthcare, banking, and transportation. It is the largest sector of the economy, responsible for most business activity. The service industry has experienced massive growth in recent decades, with over 97% of new US jobs added since 1990 coming from this sector. Areas like business services, healthcare, and social services saw the most expansion. This growth trend is expected to continue into the future, with service jobs projected to account for the vast majority of new positions.

1. SERVICE INDUSTRY

2. Overview
• Think about all the times you paid for someone to do
something for you. Maybe you paid someone to paint your
house, change the oil in your car or even fix your meal at a
restaurant? You likely paid someone to do these things for
you because you didn't have the time or skills to do them
yourself. Or, maybe you just didn't feel like doing it on your
own, and it was worth it to you to pay someone else to do
it instead?
• Restaurants, car service shops and the like are all service-
based businesses. Collectively, they are relied upon to
satisfy the needs and desires of thousands of consumers
each day. As long as we have limited time, limited
knowledge, and simply don't enjoy doing everything
ourselves, service businesses will thrive!

3. Definition
• A commercial enterprise that provides work
performed in an expert manner by an
individual or team for the benefit of its
customers. The typical service business
provides intangible products, such as
accounting, banking, consulting, cleaning,
landscaping, education, insurance, treatment,
and transportation services.

4. Three-Part Economy
• Also called the tertiary sector, the service sector is the third
piece of a three-part economy. The first economic sector,
the primary sector, covers the farming, mining and
agricultural business activities in the economy. The
secondary sector covers manufacturing and business
activities that facilitate the production of tangible goods.
The service sector, though classified as the third economic
sector, is responsible for the largest portion of the
economy’s business activity. Businesses in this sector are
rapidly placing more focus on what is becoming known as
the "knowledge economy," or the ability to surpass
competitors by understanding what target customers want
and need, and operate in a way that meets those wants
and needs quickly with minimal cost.

5. Technology in the Service Industry
• Technology, specifically information
technology systems, is shaping the way
businesses in the service sector operate. In
nearly all industries within the sector,
businesses institute technology to bolster
production; increase speed and efficiency; and
cut down on the number of employees
required for operation. This cuts down on
costs and improves incoming revenue
streams.

6. Type of Service Industry
• Consumer Services
Product sellers often offer basic services, such as buying assistance,
warranties, credit purchases and after-sale support. A number of
companies specialize in selling intangible service solutions that consumers
buy based on provider expertise, time savings or preference. Tanning,
telecommunications, massages, lawn care and snow removal are examples
of services that individuals and families buy. Services often require
recurring purchases. With lawn care, for instance, you normally pay for
service throughout the spring and summer growing seasons.
• Business Services
Business buy services to help them operate efficiently. They often
outsource work such as advertising, building and office upkeep, lawn care,
debt collections, telecommunications and snow removal. Many businesses
hire outside agencies for legal or marketing services.

7. GROWTH IN THE SERVICES DIVISION
• Data from the U.S. Bureau of Labor Statistics indicates that more than 97 percent
of the jobs added to U.S. payrolls from 1990 to 2002 were provided by the service-
producing sector. In 1984, the number of jobs in manufacturing was relatively
comparable to the number of jobs in the services, but by 1999, the service
industry employed about twice as many individuals as manufacturing or
government.
• The three industries within the services division that experienced the most growth
in the last decade have been (1) business services, (2) health care, and (3) social
services. The business services areas in which the largest number of jobs were
gained were personnel supply and computer services. The personnel supply area
includes organizations such as temporary employment agencies, traditional
employment agencies, and other organizations that supply labor to other
companies. The computer services industry includes mass-produced software,
custom programming, custom computer systems design, and computer leasing.
The primary reason for growth in both of these areas has been changes in business
processes.

8. • In the health care industry, there were four components that added large
numbers of jobs: offices of physicians and other practitioners, nursing and
personal care facilities, hospitals, and home health care. These
components gained 430,000 to 1.2 million jobs each between 1990 and
2002. Two main reasons for this increase are new medical procedures,
with which additional personnel are required to perform them, and
because of the increased number of elderly persons in the U.S. and their
requisite health care needs.
• The third industry that gained the most jobs in the services division is
social services. Social services encompass daycare for children, residential
care for the elderly, and other family services; engineering and
management services; private education; recreation and amusement; and
membership organizations (e.g., houses of worship).
• The reasons for growth in the largest growth area of the services
division—the business-oriented services—can be linked to three broad
economic developments relevant to those services: contractual
arrangements, increased construction activity, and changes in technology.
GROWTH IN THE SERVICES DIVISION

9. MASSIVE AND GROWTH
• The growth of the service industry in the past two decades
has prompted a number of questions about this sector of
the American economy and the reasons for this trend.
Some questions about the growth of the service industry
include: What is the service industry and what types of
businesses operate in it? What are the trends in growth for
the service industry and the reasons underlying its growth?
How is the service sector affected by recessions and
economic down-swings? What are the human resources
issues associated with the service industry? How is off
shoring affecting American service jobs? What is expected
in the future for the service industry?

10. MASSIVE AND GROWTH
• The services sectors—however defined, whatever
industries happen to be parts of it today—are the
consequence of a mature and wealthy economy—as
illustrated by historical statistics provided by the Census
Bureau. In 1900 services represented 25.4 percent of all
employment (business and other but excluding
government); this percentage had changed to 50.6 percent
by 1980, 57.7 percent by 1990, and stood at 62.5 percent in
the census year of 2000. With productivity in the goods-
producing industries increasing (fewer people needed to
produce the same dollar output) but much more sluggish in
growth in the services sectors, employment in the mid-
2000s stands even higher.

11. MASSIVE AND GROWTH
• A big part of whether you are happy with a service
business is based on your customer service
experience. Your customer service experience is all the
things the business does to ensure your satisfaction.
This is a key part of the success of these businesses and
how they try and differentiate themselves from
competition. This includes the quality of work they
perform, how friendly they are, the timeliness of
completing their job, and their ability to answer
questions or address any problems that may arise. Take
a minute and think about a business you like to use or
are very loyal to. They probably deliver a great
customer service experience.

12. THE FUTURE OF THE SERVICE
INDUSTRY
• As detailed above, the U.S. economy has experienced a shift from
goods-producing jobs to service-sector jobs. Projections by the U.S.
Department of Labor's Bureau of Labor Statistics expects this trend
to continue with service jobs accounting for approximately 20.8
million of the 21.6 million new jobs from 2002 to 2012. In
particular, jobs in the education and health services areas are
expected to grow the fastest, adding more jobs than any other area
of this sector at an estimated 31.8 percent Additionally,
professional and businesses services (e.g., employment services;
professional, scientific, and technical services; computer systems
design; management jobs) will grow at a high rate (30.4 percent).
Jobs in information will increase by an estimated 18.5 percent; this
area includes jobs related to software and Internet publishing and
broadcasting, and Internet service providers.

13. THE FUTURE OF THE SERVICE
INDUSTRY
• Another area that will increase is leisure and hospitality, with
employment growing by 17.8 percent due to an increased demand
for leisure activities, accommodations, and food services. Trade,
transportation, and utilities will increase by 14.1 percent in jobs
related to transportation and warehousing; the retail trade; and
water, sewage, and other utilities. A 12.3 percent growth is
expected in employment in financial activities, with increases in
jobs in real estate, finance, and insurance. Governmental service
jobs should also grow at a rate of 11.8 percent, with jobs in public
education and hospitals, state and local governments, and the
federal government increasing in number. Finally, other non-
governmental services that should increase at a predicted 15.7
percent are jobs in religious organizations, personal care services
(e.g., hair stylists), and private household employment (e.g.,
cleaning services).

14. THE FUTURE OF THE SERVICE
INDUSTRY
• The services sector is distinct from the goods-producing
sector in the U.S. economy, and includes a very wide variety
of industries and jobs. The number of jobs in the services
sector has been growing in recent years, and data from the
U.S. government indicate that this trend will continue.
While many service sector jobs are believed to be
recession-proof, only some areas of that sector are truly
counter-cyclical, and some are simply noncyclical, meaning
that they resist job loss during times of economic
downturn. As service sector jobs increase in number, there
are new concerns for managing human resources, one of
which is the issue of offshoring, which is increasingly slowly.