Contracted-Out Services Market Review 2007: Industry Report

Contracted-Out Services Market Review 2007

Product Type: Market Research Report
Published by: Key Note Publications Ltd
Published: July 2007
Product Code: R310-1459

Description

Key Note estimates that the UK contracted-out services market was worth £303.09bn at current prices in 2006, having grown by 8.4% on 2005 and by 37% over the review period (2002 to 2006).

The contracted-out services covered by this Market Review, which are sometimes described as business-support services, are business-to-business (B2B) services bought in from specialist providers. They range from legal services, computer support and market research to office cleaning, catering, security and total facilities management. Some users of these services are small and medium-sized enterprises (SMEs) that do not have the resources to provide them in-house. However, clients also include large private companies that choose not to devote management time and effort to non-core activities, and public-sector bodies that put such activities out to private tender.

The best-performing sectors over recent years have been certain professional services such as labour recruitment, management, architectural and engineering consultancy services, although, in the advertising services market, performance has been weak. Of the `hard' contracted-out services, the investigation and security services market has been the best performer. At the other extreme, laundry and dry-cleaning services constituted the worst-performing market of all over the review period.

Business services have benefited from the fact that, in recent years, the UK has enjoyed modest but steady economic growth, accompanied by low inflation and low unemployment, providing a stable background to the market's development.

Some items of legislation, particularly those relating to employment matters, have had a disproportionate impact on the operations of SMEs, which are well represented in the business-services industry, where many markets are highly fragmented. The main examples of such legislation relate to the national minimum wage and to the protection of employment in situations where undertakings are transferred from one employer to another. However, although these influences have had a negative impact on some businesses, in other situations they have been turned to the advantage of businesses that can offer their expertise as a way of mitigating any impact on potential client firms.

The net effect of these influences has been that the rate of growth in the contracted-out services sector over the past 5 years has been considerably higher than in the economy as a whole.

In such a disparate industry, each market has a different set of driving factors. In the case of the investigation and security market, one of the main drivers has been the heightened awareness of security risks associated with the threat of international terrorism. In many other markets, the main determinant has been the need among potential client companies to concentrate their managerial efforts and attention on their core business. For many markets, outsourcing has held out the prospect of substantial cost savings, most notably in the case of activities where there is a well-educated workforce overseas able to take on certain activities — not just in telephone call centres, but also professional activities — at a fraction of the cost associated with the employment of a UK-based workforce (by what has become known as `offshoring').

Different contracted-out services markets respond in different ways to the need to take account of the impact of their activities on the environment. Many services, particularly professional services such as those provided by lawyers, accountants, market researchers and recruitment specialists, do not have a direct impact on the environment in the way that the utilities and the construction, manufacturing and transport industries do, while firms in areas such as industrial cleaning, laundry and dry cleaning have the potential to make a considerable impact. However, firms in most markets have responded to the need to demonstrate how they propose to take environmental considerations into account.

There has been a recent trend towards the bundling together of a range of support services, including catering, cleaning and housekeeping, at the same time as facilities management has been recognised as a service sector in its own right.

In the immediate future, the UK macro-economic environment is seen as favourable to the continued growth of the UK contracted-out services market. In the short term, there is also increased optimism on the part of firms operating in the UK service sector, which is highest among those in business and professional services sectors. However, overseas competition continues to concern a significant minority of firms operating in professional sectors.

The implementation of the EU Services Directive is likely to lead to the eventual removal of legal and administrative barriers to the development of service activities between member states, affecting business services such as management consultancy, certification and testing, advertising, recruitment and facilities management. These proposals should start to take effect over the next few years, representing a competitive threat to some, but offering potential for UK firms that are able to take advantage of these new opportunities to compete in the wider European marketplace.

Table of Contents

Executive Summary
1. Industry Overview: Report Coverage; Definitions; Standard Industrial Classification; Other Recent Key Note Reports; Report Background; Historical Background; Recent Legislation; Economic Trends; Population; Gross Domestic Product; Inflation; Unemployment; Household Disposable Income; Market Size; Market segmentation; Canteens and Catering; Canteens; Catering; Computer and Related Activities; Hardware Consultancy; Publishing of Software; Other Software Consultancy and Supply; Data Processing; Database Activities; Other Activities; Research and Development; Research and Experimental Development on Natural Sciences and Engineering; Research and Experimental Development on Social Sciences and Humanities; Legal Services; Activities of Patent and Copyright Agents; Barristers at Law; Solicitors; Other Legal Activities Not Elsewhere Classified; Accounting Services; Accounting and Auditing Activities; Book-Keeping Activities; Tax Consultancy; Market Research and Business Consultancy Services; Market Research and Public Opinion Polling; Business and Management Consultancy Activities; Architectural and Engineering Services; Architectural and Engineering Activities and Related Technical Consultancy; Technical Testing and Analysis; Advertising; Sale or Leasing Activities of Advertising Space or Time; Planning, Creation and Placement of Advertising Activities; Advertising Activities Not Elsewhere Classified; Labour Recruitment and Personnel Services; Investigation and Security Services; Investigation Activities; Security and Related Activities; Industrial Cleaning; Traditional Cleaning Services; Window Cleaning Services; Disinfecting and Exterminating Services; Specialised Cleaning Services; Other Cleaning Services; Washing and Dry Cleaning Services; Miscellaneous Business Activities; Photographic Activities; Packaging Activities; Secretarial and Translation Activities; Call-Centre Activities; Credit Reporting and Collection Agency Activities; Speciality Design Activities; Other Business Activities; Facilities Management; Industry Structure; Concentration; Number of Companies; Employment; Market Position; Key TRends; Outsourcing Trends; Liberalisation of EU Cross-Border Services; The Environment; LEGISLATION; Contracting Out of Public-Sector Activities; Employment Legislation; National Minimum Wage Act 1998; Disability Discrimination Act 2005; TUPE Regulations 2006; Work and Families Act 2006; Employment Equality (Age) Regulations 2006; Sector Skills Councils; Key Trade Associations; Business Services Association; Cleaning and Support Services Association; European Outsourcing Association; National Outsourcing Association
2. PEST Analysis: INTRODUCTION; political FACTORS; Terrorism; Provision of Public Services; Public/Private Partnerships; Economic Regulation; Safety Regulation; Economic FACTORS; Gross Domestic Product; A Recession-Proof Sector?; Inflation and Unemployment; International Trade; March 2007 Budget; Social FACTORS; Demographic Trends; Environmental Protection; Employment Legislation; Technological FACTORS; Information Technology; Other Technological Developments
3. Key Note Primary Research: Introduction; policy statements; Business Services Association; Electronic Data Systems Ltd; PricewaterhouseCoopers LLP; Compass Group PLC; Deloitte & Touche LLP; Fujitsu Services Holdings PLC; Accenture (UK) Ltd; KPMG LLP; Capgemini UK PLC; Hays PLC; Ernst & Young LLP; Rentokil Initial PLC; Summary
4. Competitive Structure: The marketplace; Market Leaders; Electronic Data Systems Ltd; Company Structure; Financial Results; PricewaterhouseCoopers LLP; Company Structure; Financial Results; Compass Group PLC; Company Structure; Financial Results; Deloitte & Touche LLP; Company Structure; Financial Results; Fujitsu Services Holdings PLC; Company Structure; Financial Results; Accenture (UK) Ltd; Company Structure; Financial Results; KPMG LLP; Company Structure; Financial Results; Capgemini UK PLC; Company Structure; Financial Results; Hays PLC; Company Structure; Financial Results; Ernst & Young LLP; Company Structure; Financial Results; Other Companies; The Capita Group PLC; Computacenter (UK) Ltd; Group 4 Securicor PLC; LogicaCMG PLC; Omnicom Europe Ltd; Rentokil Initial PLC; Serco Group PLC; WPP Group PLC; Outside Suppliers/contractors; Marketing Activity; Main Media Advertising; Exhibitions, Conferences and Trade Shows
5. Canteens and Catering: Definition; Key TRends; Company Strategies; Skills Shortages; School Catering; Catering Subsidies; Market Size; Supply Structure; Number of Companies; Employment; Trade Associations; British Hospitality Association; Hospital Caterers Association; Other Specialist UK Associations; European Federation of Contract Catering Organisations; Major Players; Compass Group PLC; Sodexho Ltd; Buying Behaviour; Forecasts 2007 TO 2011
6. Computer and Related Activities: Definition; Key TRends; Offshoring; Professionalism in IT; Market Size; Supply Structure; Number of Companies; Employment; Trade Associations; Intellect; European Information, Communications and Consumer Electronics Technology Industry Association; World Information Technology and Services Alliance; MAJOR PLAYERS; Electronic Data Systems Ltd; Fujitsu Services Holdings PLC; Capgemini UK PLC; Advertising and Promotion; Buying Behaviour; Forecasts 2007 TO 2011
7. Research and Development: Definition; Key TRends; Expenditure on Research and Development; Internationalisation of UK R&D; Market Size; Supply Structure; Number of Companies; Employment; Trade Associations; Association of Independent Research and Technology Organisations; Major Players; GlaxoSmithKline Research and Development Ltd; QinetiQ Ltd; Buying Behaviour; Forecasts 2007 TO 2011
8. Legal Services: Definition; Key TRends; Quality of Legal Services; Outsourcing of Legal Services; Market Size; SUPPLY STRUCTURE; Number of Companies; Employment; Trade Associations; The Commercial Bar Association; The Law Society; Major Players; Allen & Overy LLP; Eversheds LLP; Buying Behaviour; Forecasts 2007 TO 2011
9. Accounting Services: Definition; Key TRends; Outsourcing of Finance and Accounting Services; Accountancy Profession in the UK; Market Size; Supply Structure; Number of Companies; Employment; Trade Associations; Chartered Institute of Management Accountants; Institute of Chartered Accountants in England and Wales; Major Players; PricewaterhouseCoopers LLP; Deloitte & Touche LLP; KPMG LLP; Buying Behaviour; Forecasts 2007 TO 2011
10. Market Research and Business Consultancy Services: Definition; Key TRends; Management Consultancy Outsourcing; Central Government's Use of Consultants; Ipsos MORI; Market Size; Supply Structure; Number of Companies; Employment; Trade Associations; European Society for Opinion and Marketing Research; Management Consultancies Association; Market Research Society; Public Relations Consultants Association; Major Players; TNS UK Ltd; Accenture (UK) Ltd; Buying Behaviour; Forecasts 2007 TO 2011
11. Architectural and Engineering Services: Definition; Key TRends; Consulting Engineering Market; Impact of Environmental Legislation; Market Size; Supply Structure; Number of Companies; Employment; Trade Associations; Association for Consultancy and Engineering; Royal Institute of British Architects; Major Players; WS Atkins PLC; Mott MacDonald Group Ltd; Buying Behaviour; Forecasts 2007 TO 2011
12. Advertising: Definition; Key TRends; Complaints to the Advertising Standards Authority; Internet Advertising; Threats to the Advertising Market; Market Size; Supply Structure; Number of Companies; Employment; Trade Associations; Advertising Association; Incorporated Society of British Advertisers; Major Players; WPP Group PLC; Omnicom Europe Ltd; Buying Behaviour; Forecasts 2007 TO 2011
13. Labour Recruitment and Personnel Services: Definition; Key TRends; Industry Structure; Employment; Market Size; Supply Structure; Employment; Trade Associations; Recruitment & Employment Confederation; Major Players; Hays Specialist Recruitment Ltd; Adecco UK Ltd; Buying Behaviour; Forecasts 2007 TO 2011
14. Investigation and Security Services: Definition; Key TRends; Environmental Legislation; Cash-in-Transit Attacks; Aviation Security; Market Size; Supply Structure; Number of Companies; Employment; Trade Associations; The Association of Police and Public Security Suppliers; British Security Industry Association; Major Players; Group 4 Securicor PLC; Reliance Security Services Ltd; BUYING BEHAVIOUR; Forecasts 2007 TO 2011
15. Industrial Cleaning: Definition; Key TRends; Environmental Issues; Skills Requirements; Employment Legislation; Market Size; Supply Structure; Number of Companies; Employment; Trade Associations; Association of Building Cleaning Direct Service Providers; Association of Healthcare Cleaning Professionals; British Cleaning Council; Cleaning and Support Services Association; European Federation of Cleaning Industries; Major Players; OCS Group Ltd; ISS A/S; Buying Behaviour; Forecasts 2007 TO 2011
16. Washing and Dry Cleaning: Definition; Key TRends; Trends Shared with Other Markets; Environmental Trends; Market Size; Supply Structure; Number of Companies; Employment; Trade Associations; Textile Services Association; Guild of Cleaners and Launderers; Major Players; Johnson Service Group PLC; The Davis Service Group PLC; Buying Behaviour; Forecasts 2007 TO 2011
19. A Global Perspective: Share of GDP TAKEN BY Services; Sectors of the EU Economy; The Service Sector; Business Services; Business Services Subsectors; Summary
20. The Future: introduction; Forecasts 2007 TO 2011; Future Trends; Demographics; Short-Term Trends in the UK Service Sector; Prospects Across the EU Service Sector; Future Trends in Facilities Management; Legislation and Regulation; Offshoring; Other Outsourcing
21. Further Sources: Associations; General Sources; Government Publications; Other Sources; Bisnode Sources

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