Opportunities and challenges in Finnish service business

The purpose of this report is to highlight services as one of the key issues in the debate on Finnish well-being, in addition to industry and digitalisation. The effects of digitalisation on the service sector are as strong as those it has on industry; it increases profitability and changes competition conditions e.g. with the adoption of service platforms. As the service sector covers such an extensive share of activities, the need to be prepared for changes is emphasised, as the effects of digitalisation can be significant. For this reason, policy measures that support structural change are essential. This report contains five different expert perspectives on the development of service industries and the effects of digitalisation. Etlatieto assesses the scalability and export potential of services, as well as the impact these have on an increase in number of personnel, value added and profitability. McKinsey & Company notes that Finland's service sector until now has been a source of stable growth and employment and assesses the impacts of digitalisation from this viewpoint. The VTT's perspective establishes a broader image of the global trends for services. According to DIGILE's viewpoint, the platform economy is emerging as a winning profitability solution. A viewpoint related to Tekes' Serve - Pioneers of Service Business programme describes the lessons learnt from the programme as an exercise in renewal of service companies. Based on the views of these experts, the Ministry of Employment and the Economy has outlined its conclusions for the basis of further work. One of the core issues related to the development of productivity in the national economy is whether service enterprises can utilise economy of scale and the potential presented by export. We must increase peoples' understanding of how the fates of industry and services are interlinked, and services must be viewed as business opportunities in all fields. One of the challenges we will face in the future will be to combine products and services in innovative ways and across industry boundaries. Digitalisation is globalising the market for services and facilitating growth of profitability, while at the same time decreasing the need for labour force in many fields. However, digitalisation is also creating new jobs in other, partially completely new fields and creating potential for speeding up Finnish innovations. For this reason, we must identify ways in which Finland's service businesses can benefit from the sector's global growth and apply policy measures that will serve this development