Innovation in service industry

The services firms are responsible for a large portion of the GDP worldwide and the trend shows how this indicator has been increasing the last years in developed countries. As a consequence, there is also a shift in employment and the labor market, since services rely strongly on labor forces and require more skilled employees. Services are transforming economy´s composition due to the rapid growth of the sector. Technology has played an important role in this rise of the service sector in developed countries, contributing to improve productivity. Innovation is not exclusive to manufacturing, services firms are also innovative. Innovation has played the role of the main driver in the rise of service sector. However, as the capacity to innovate in a firm increases, it gains competitive advantage and generates a broader variety of offerings for its customer. In this sense, service firms need to be customer-oriented. Moreover, services add value to other sectors since services add differentiation and sustainable advantage to them through outsourcing services, complementary services and embodied services. Besides this, service activities are heterogeneous and innovation varies in extent and form between industries. The extent of adoption and interest in technology varies amongst the different sub-industries within the service sector. However, some surveys reveal that in developed economies, the service sector is the biggest user and buyer of information technologies among other sectors, particularly ICT. The service sector through Knowledge Intensive Business Services (KIBS), intensive technology services in particular, is a user, producer and agent of technology, which contributes to the development and diffusion of technological innovations. The competitiveness of the service firms depends on their skills to adapt and exploit technology in terms of cost, delivery requirements, service level, customization and service flexibility. It also modifies service characteristics, which lead to shorter services cycles, impacting the production and delivery of new services, while targeting clients more effectively. Furthermore, technological innovations are enabling service innovation creating new possibilities to innovate.