Product development involves in all the SDLC activities i.e 
requirement gathering,analysis,design,code 
building,testing ,implementation and maintanance where as 
incase of IT services you will be given work in pieces and 
you may not require to follow entire SDLC procesess,like 
attending the calls from customer,resolve the issues in a 
given amount of time and update the status/escalate if you 
can not resolve the issue in a given amount of time.

Product development involves :
1. Idea Generation
2. Idea Screening
3. Concept Development and Testing
4. Business Analysis
5. Beta Testing and Market Testing
6. Technical Implementation
7. Commercialization

Whereas IT Services involves delivery of some key services
e.g. Implementation, Testing, Infrastructure Support,
Database Support etc.