The melting of the dividing lines between services and products reflects the general change in the need for skills and networking by companies. Following the phenomenon by means of statistics is, however, difficult because industrial companies are changing into service companies "from within".

The growth in the significance of services has been the main trend guiding the development of industry and commerce in western countries for a long time. The trend can be seen in the expansion of traditional service areas and in the increase in service business activities by industrial companies.

According to the Services 2020 project of the Confederation of Finnish Industries (EK), during the past twenty or so years services produced by companies for each other in particular are one of the fastest-growing international sectors in the world. Knowledge-intensive services for business life have become the core of industrial growth and economic dynamism in industrial countries.

Focus on core skills

"Although various purchased services have been already been used for a long time, the real wave of corporate networking began in Finland in the 1990s," says Penna Urrila, an economist at EK.

Companies use purchased services in order to focus on their core skills. At forest companies cleaning is not a core skill, nor is data administration at a metal company.

"Furthest down the road in the development are many technology industries in electronics and mechanical engineering, but the phenomenon is also quite common among service companies," Urrila states.

Increase in service jobs

There are no precise figures in percentages for the melting together of services and products or the outsourcing of activities and corporate networking. And the calculation method is also unclear because of statistical practices.

"Some kind of guideline can be obtained from the number of those working in the business-life services sector. In the mid-1970s there were slightly more than 50,000 employees in business-life services in Finland. The corresponding figure at the beginning of the 1990s was more than 100,000 and in 2004 almost 205,000," Urrila says.

Business-life services include not only IT services but also cleaning, property maintenance, advertising services, lawyers' firms and engineering firms.

"We are talking about companies where an area of activity is the main area i.e. that does not include cleaners working at a metal firm," Urrila points out.

Internal service company created

The statistical problems and blurring of the dividing line between sectors are to a great extent a reflection and consequence of the change itself. The inclusion of services in industrial products also plays a part.

"Long-term maintenance agreements, research and development operations, marketing, consulting and the handling of legal issues are increasingly being sold as part of the product. So the proportion of services in the product's price may be greater than that of the item of goods itself."

This again depends on what is counted as a service and whether it is handled by one's own efforts or whether it is purchased from an outsider.

"As products become more technical, design, product development and marketing costs become more important in them. Many producers may, however, handle these services themselves. Thus an industrial company changes gradually into a service company from within," Urrila explains.

>> All services from one point

The clearest examples of networking are the purchase of IT services and property and cleaning services.