Business Services Outlook 2018

What is the business services sector?

Business services is a diverse industry, broadly serving companies in five sectors: facilities management, construction services, business process outsourcing, IT and digital services and outsourced public services. The sector employs around 3.3m people across the UK and is a major contributor of UK employment growth with 12 out of the 50 fastest growing occupations falling within the business services sector. The existence, and growth, of this industry allows other organisations to focus resources on their core competencies and therefore bring about efficiencies in the broader economy.
 

What are the key challenges for the business services sector?

While there is now sustained demand for business services, companies are increasingly facing pressure on their resources and margins which impacts their ability to meet that demand. For instance, skills shortages are starting to affect their ability to grow while higher costs continue to tighten their profit margins. Brexit could also result in new challenges, such as the devaluation of sterling affecting prices of imported goods and reduced access to talent, but offer new opportunities too.
 

What’s the outlook for business services in 2018 and beyond?

There are a number of market factors that influence the outlook for 2018, from economic and policy related factors such as the Apprenticeship Levy and National Living Wage, to industry and technology factors, such as AI and robotics. In order for business services companies to maximise their growth potential, they should consider:

1. Focusing on efficient operations
   As the cost pressures are unlikely to disappear in the short term businesses should focus on improving the efficiency of their operations. Possible ways to achieve this include identifying growth areas and new service areas to increase scale, simplify processes and their supply chain where possible and increase productivity through the use of technology.
2. Prioritising talent management
   With the business services sector largely people businesses that rely on their staff to make them competitive, industry reports suggest companies are finding it increasingly difficult to find the right people. How can businesses mitigate the impact of these challenges on their organisations? Technology is one answer, but a longer term strategy should also be set in place.
3. Addressing technology threats and opportunities
   As with many other industries, over the last few years the business services industry has had to become more digital and concentrate on developing and applying technologies in their operations. However, this has also led to new challenges. What can business services organisations do to address these threats and leverage new opportunities?
   

Previous edition

Business Services Outlook 2015