A service is essentially an experience or an intangible offering that a consumer or a business pays for. Similar to exporting products, services can also be exported when a service provider in one country provides their service to a business located in another.
The professional or company that offers services to clients from other countries in exchange for a fee is called a service exporter. A service export may fall under categories such as media, business, consulting, financial and legal, and software, among various others.
Since there are no tangible goods involved, the quantification and classification of exported services can be rather complex to understand. Nevertheless, some methods have been established to measure the economic impact of service exporters and what exactly counts as a service, which we will outline in this article.
Type of Services That Are Typically Exported
There are various business sectors and industries that export services for clients worldwide. The most popular business sectors range from education to tourism. We’ve listed some of them in more detail below.
Companies and professionals often require media services such as video editing, graphic designing, logo designing, voice-acting, animation, mixing and mastering audio, and more.
These media services are often provided over the internet by a service exporter for a fee. Many of these services do not involve a physical product but rather a professional’s expertise in their field.
Education & Training
Similar to media services, educational and training services such as academic tutoring, music lessons, dance lessons, physical training, and more can be provided remotely.
Foreign trainers or professional teachers who provide services to people of another country also export their services. Online courses and training sessions are common and can be easily conducted using online tools and platforms.
Software services are one of the most in-demand service exports. These services can be requested from small-scale businesses to large corporations, depending on their needs.
Software service exports consist of an extensive range of services, including cloud services, internet service provision, IT support, cybersecurity services, user testing, virtual assistance, QA testing for codes, and many more.
Most software service exporters offer their services remotely. However, in some cases, IT companies set up local offices in another country to provide better services to their clients.
Tourism-related services are also provided worldwide as they transcend local boundaries. As tourists travel to different countries and go on exciting excursions and tours, they interact and pay for the services of tourist guides and hotels.
Business tourism, educational tourism, eco-tourism, and hospitality services fall under the category of service exports since the clients availing of the services are often non-residents of the country.
Consultancy is another frequently exported service that is requested by small- and large-scale companies. Foreign consultants specializing in financial, business, engineering, environmental, legal, and HR fields provide tailored consultation to companies and offer advice backed by studies, research, and company plans.
These service exports are highly valuable since the service exporter is often deemed an expert in their field and can impact business plans, as well as a company’s future trajectory.
The hospitality industry, which includes hotels and bed-and-breakfasts, exports a wide range of services to tourists. They provide lodging to non-residents, along with offering housekeeping, event management, dry cleaning, courier, doctor-on-call services, and much more.
Although the services are offered in-person to foreigners, they can still be classified as service exports, as the purchase is made to businesses and individuals overseas.
Publishing services include creating, editing, designing, and publishing written, audio-based or visual content. These service exports can be provided remotely. Content creators do not need to be locally present to offer their services to businesses in another country.
Therefore, many people opt for exporting these services from regions where these services are provided at more affordable rates. Publishing services may also comprise peer review, proofreading, typesetting, and copyediting services.
There are a variety of other service exports provided in different industries which cater to a wide variety of clients. Other export services include:
- Architectural services (landscape design, interior design, etc.)
- Translation services
- Call center support
- Tax advisory services
- Marketing services
- Telehealth services
What To Take Note of When Exporting Services
There are various aspects to consider when exporting services. Understanding these aspects can help to facilitate a healthy relationship between service exporters and customers. Let’s explore some of these in more detail.
1. Extensive Market Research
Since service exports are provided to foreign individuals or businesses, it is essential for a service exporter to learn about the market and their client’s culture, needs, and methods of doing business.
Understanding their clients and their industry through proper market research can help deliver and more meaningful and effective service offering. In turn, this can positively affect their customer’s brand strategy and interact with the target audience more readily.
2. Understanding Tax Implications
Service exporters should also consider the foreign taxes they may incur if they provide services to businesses located in foreign countries. The amount and types of taxes that will need to be paid will depend on the country where the services are being sold from (and sometimes even sold to).
3. Considering Geopolitical Risks
If a service exporter offers services to another country, they are advised to learn more about the political, business, and physical risks involved in the region.
In case of an emergency, a service exporter may be forced to navigate through sanctions, restrictions, trade and supply chain issues, workforce disruptions, natural disasters, or other problems to protect themselves and their business.
4. Setting Expectations with Customers
Since service exports aren’t tangible goods, new clients often overestimate or misunderstand the scope of services. To avoid client dissatisfaction, it’s advised to set expectations with clients beforehand about the deliverables and the benefits they will achieve from the service exports.
5. Accounting for Additional Fees
Since many service exporters render services to different countries, they may be required to receive payments in foreign currencies. This may need them to pay additional banking and transactional fees.
These charges can impact a service exporter’s overall income significantly, depending on the currency exchange fees or conversion rate. Therefore, it’s best to consider any type of additional fees before exporting any service.
6. Agreeing on Communication Channels
Since most exported services are provided remotely online, it is crucial to establish a set communication channel for updates, changes, new orders, additional requests, and feedback.
This can help a service exporter streamline efficient and transparent communication and provide ease of mind to the client. The more transparent and open communication channels are, the faster trust is built.
7. Establishing Proper Agreements & Procedures
For larger orders or extensive services, it is crucial for the service exporter and client to establish a written agreement, procedure, contract, etc. A contract clearly outlines the deliverables, timeline, and other details regarding the service export.
A written agreement can be legally binding if all parties sign and agree to the terms and conditions of the document. It can protect the service exporter and their business in case of a serious issue.
Certain online platforms provide standard terms and conditions between the service exporter, client, and platform.
Service Exporter Case Study
Let’s explore an example that focuses on a service exporter in Miami, Florida, providing graphic designing services to a company in Manchester, UK. This example will help you understand how service exports are requested and delivered.
A company in Manchester, UK, requires graphic designing services. They come across a graphic design company in Miami, Florida that offers the service and requests them to work on their project.
Once an agreement has been signed that clearly defines deliverables, fees, timelines, and other details between the two companies, the Miami-based graphic designing company works and delivers the expected project to the company in Manchester.
Since the design project has been requested from Manchester, UK, and will be delivered to another country (in this scenario Miami, Florida), it is classified as an export.
Moreover, as the design services do not consist of any tangible goods, the project that will be delivered is deemed a service export.