The Business Services IndustriesThe Business Services industry represents a key economic driver for many Western economies. The prosperity of business services suppliers depend largely on the relative economic performance of larger companies. Unfortunately, many business services firms are coming under increasing pressure as the wider economy struggles through the economic slowdown. Most public and private sectors organisations are curtailing business investment, reducing overheads and squeezing smaller suppliers over long-term payment terms.
So despite the boom of business to business services in the last few decades, the medium term outlook for the sector is mixed. As the austerity measures of many debt-ridden countries take hold, many public sector organisations are re-tendering managed service contracts. Likewise, cutbacks in Corporate spending tend to impact sales-led activities, such as contracts with marketing agencies, marketing communications specialists and advertising agencies. The reverse is true in times of prosperity.
There is a vast array of business service providers to choose from. Where there is expertise and manpower required, a service provider probably exists to fill the business need. These service providers range from auction houses, cleaning firms, catering services, marketing consultancies, entertainment services, special occasions, advertising, recruitment, office services, printing services, rental hire firms, management support, to specialist consultancy amongst many more market sectors.
Business-to-business suppliers aim to free up their clients' time, to allow them to concentrate on their core activities that drive turnover. Whether you run a large company or a small firm, you can make use of business service organisation (such as an events management company or management research company), with the expertise and know-how in a niche. Outsourcing non-core services can help take advantage of specialist expertise and experience (such as business communications skills), without the direct overheads of recruiting and employing qualified staff.
Outsourcing also help to fix budgets and spread on going costs over a longer period. Many longer-term service contracts may come with a minimum term, and termination period. Many are guaranteed by a service level agreement that provides a degree of confidence to the end user. Most suppliers in business services industries will have standard terms and conditions that spell out the scope of a service, the responsibilities of the client and how end-users should use the call escalation procedure. The relative balance of power between the end user and service provider is usually reflected in the agreed contractual terms. These are usually negotiated between business buyers and supplier account managers.
For smaller and more localised general service providers, (such a commercial sign providers or inventory services), or winning larger outsourcing contracts can be challenging against bigger rivals. Service delivery frequently requires an expensive customer service infrastructure and skills distributed across a wide geographic area. Hence many firms invest in formal business training for their staff. Smaller business services' companies also have to cope with changing local labour patterns, as employers shrink their workforce and decentralise their place of operations. Labour market shrinkage also affects sectors such as recruitment and cleaning services. Some sectors (such as legal services) are less affected by economic cycles than changes to regulatory structures,
The services sectors reflect the relative growth or decline of key sectors of the economy. For example, as the West struggles to append its decline in manufacturing output, (relative to the growth in manufactured exports from BRIC countries), some service sectors have benefited. Notably engineering consultancy and management consultancies have seen sector growth as manufactures seek to streamline and innovate. Whereas, service sectors that rely on construction and property investment have struggled in recent years. This has been due to residential, and commercial property markets have boomed and bust in long credit fuelled bubbles.