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Business Services

Business ServicesBusiness Services – Industry Overview

The sector covers a range of provisions that support firms in the execution of their day-to-day business. Such services may include facilities management, professional advisory (legal, accountancy, management consultants, etc), recruitment and business process outsourcing. Business services collectively provide the ‘backbone’ to firms worldwide and particularly in developed economies where maximising budgets and spend is a key priority for businesses in the journey to profitability: business services providers allow companies to access vital services at a lower cost per sale, usually though a form of outsourcing.

The UK is a global leader in this marketplace with some of the largest, most mature and sophisticated outsourcing markets in the world. Business services accounts for 9.3% (£142 billion) of total UK economic output but is a highly fragmented market which is characterised by the larger suppliers, despite the sector making up a significant proportion of the industry.

Companies continue to rationalise the number of business services providers they use as they seek efficiency in procurement and administration as well as looking at how best to benefit from economies of scale. This poses a challenge for standalone providers who need to diversify their offering in order to maximise opportunities for business: such diversification is being seen in the form of Partnerships and Joint Ventures (JVs), although this in itself presents the further issues of Client ownership and service ‘overlap’ management.

Additionally, highly-saturated markets are resulting in reduced opportunities for providers to win new business. As market growth slows, certain elements of the sector are facing commoditisation, forcing providers to change their value proposition from a cost removal service to such a proposition that enhances their Clients’ own offerings.

Opportunities for UK business services firms lie across both the public and private sector, although it is expected that much more opportunity for private firms to deliver public services will be presented over the coming months and years, particularly when viewed in the context of tighter public sector budgets and the pressures of austerity.

Business Services Sector Expert

Chris Airey

To find out more about Chris’ views and insights on the Business Services Sector read his blog.