In this thesis, I, as the author, have tried to propose a methodology for establishing IT service taxonomy in order to elaborate IT service portfolio and IT service catalog. As a core part of my thesis, IT service taxonomy has been discussed to manage IT services in an efficient way in the small and medium sized enterprises The small and medium sized enterprises can use the categories and sub categories of this taxonomy to define their service catalog and portfolio. In that regards, a list of IT services has been identified from the industries and has been used to define the IT service taxonomy.