Service sector

third of the three economic sectors of the three-sector theory

The Service Sector, also called tertiary sector, is the third of the three traditional economic sectors. The other two are the primary sector, which covers areas such as farming, mining and fishing; and the secondary sector which covers manufacturing and making things. The service sector provides services, rather than producing material commodities. Activities in the service sector include retail, banks, hotels, real estate, education, health, social work, computer services, recreation, media, communications, electricity, gas and water supply.[1]

Cleaning a street in Paris
Service workers, early 20th century

The service sector is an important part of the economy. For example, in Australia in 2007, 85% of all businesses were in the service sector.[1] In 2009 there were more than nine million people employed in the service sector in Australia, which was 86% of all jobs.[1] In India, there has been a huge growth in service sector businesses which made up 55% of India's GDP in 2006—2007.[2] Computer software businesses in India are increasing at a rate of 35% per year.[2]


Many sector businesses focus on what is called the “knowledge economy”.[3] They need to keep ahead of other businesses by understanding what their customers want and being ready to give it to them quickly and at low cost.

One good example of this are banks which went through big changes in the late 20th century. Using information and communication technology, banks have vastly reduced the number of people they need to employ, and lowered the cost of providing bank service. For example, an automated teller machine is able to provide basic banking services 24 hours a day, 7 days a week, in many different places. Before this, banking services were only available from the bank when it was open. Many banks and building societies have joined together to form much lower cost businesses that can make more money from a wider customer base. The key to this process is gaining information about their customers and constantly coming up with new services for them.


  1. 1.0 1.1 1.2 "Services Sector Fact Sheet". Australian Government. Retrieved 2010-03-20.
  2. 2.0 2.1 "Service sector of the Indian economy". Business Maps of India. Retrieved 2010-03-20.
  3. "Knowledge Economy". Australian Centre for Innovation. 2008. Archived from the original on 2009-09-13. Retrieved 2010-03-20.