The business of being a cog in another company’s wheels might not be glamorous, but it can be lucrative. Third-party providers of routine operational services—such as the processing of payrolls, the movement of inventory and goods, the management of data centers, and the provision of extra manufacturing capacity—took in more than $1 trillion around the world in 2000, according to Dun & Bradstreet. What is more, the market for these services doubled in size from 1997 to 2000. Analysts estimated that this eclectic sector, made up of companies that in essence take over activities other companies choose to outsource, would grow by 25 percent in 2001 and could experience similar growth in 2002.

What is propelling the expansion? In theory, providers of nuts-and-bolts services have long had a compelling pitch to make to the large and midsize companies that make up their customer base: "Why should you directly manage the routine operational activities that make up a substantial portion of any business? Overhead tasks such as billing and human resources, as well as supply chain processes such as procurement, manufacturing, and logistics, are not an intrinsic part of your business; they are infrastructure activities. Let us manage them for...