Business Services: Background
Industry Composition:
The business services industry is a very broad industry encompassing many different categories of business operations; all of them provide some sort of non-financial service to other companies. These services include advertising, marketing, consultation, logistics (including travel and facilities services), waste handling, staffing services, shipping, administration, and security services to name a few. Nearly every business in operation has need for at least one of the different kinds of service offered by the industry.
- Marketing companies are responsible for increasing the sales of a client company by helping the company gain new customers as well as keep current ones
- Legal services are needed to deal with business transactions, as well as for litigation purposes
- Logistics and shipping companies are responsible for connecting businesses to other businesses or consumers by collecting, storing, transporting, and delivering products
- Staffing companies match people in need of jobs, temporary or permanent, with companies in need of qualified employees
- Leasing companies fill a client's need for certain items without requiring full purchase
- Security companies are responsible for keeping a company's assets secure
- Consulting companies are in the business of fulfilling needs for expertise that clients cannot fulfill themselves. These companies may offer professional, scientific, or technical consulting, management or strategy consulting, or human resources consulting
For globalEDGE’s purpose, all work related to money or asset management that a business needs is filed under Financial Services, while all of the other miscellaneous help a business may need is classified under Business Services. Aside from logistics and shipping, all other segments of the transportation industry are classified in Transport Manufacturing.
Leaders:
Primarily due to the increased fragmentation of advertising media (more TV channels, the internet, etc.), the advertising and marketing segment experienced a lot of consolidation and mergers among businesses, until the global recession of 2008 slowed the pace a bit. Now the market is reheating, with a few companies that offer a diverse range of services, including Omnicrom Group and WPP Group ahead of the rest. Instead of direct competition, most other marketing companies cater to a niche market. In the consulting world, companies are separated into two groups; the industry elite and smaller, more specialized firms. The industry elite are those that can offer expertise in many different fields, such as Accenture, the largest consulting firm in the world, or IBM. Cornerstone Research, Gartner, and PRTM are some of the specialized consulting firms. United Parcel Service, YRC, and FedEx lead for shipping and logistics services, providing "intermodal" transport. The big names in human resources and facilities management are Hay Group and Mercer Human Resource Consulting, respectively, and lastly, The Brinks Company is recognized as a top security company. Waste Management is the top solid waste removal company.
Trends:
It is only logical to assume that the business service industry will be wherever the businesses are. As businesses are created in emerging markets, such as China and India, the business service industry is following.
Among business-to-business shipping, there is increased demand for complete solutions in which warehousing services are integrated with transportation and other logistics functions. This includes value-added services such as sorting bulk goods into customized lots, packaging goods, controlling and managing inventory, order entering and fulfillment, labeling, performing light assembly, and marking prices, all of which has helped improve the efficiency of relationships between manufacturers and customers.
Firms rely on new technologies and the coordination of processes to expedite the distribution of goods.
Voice control software allows a computer to coordinate workers through audible commands to reduce errors and increase efficiency.
Radio Frequency Identification Devices track and manage incoming and outgoing shipments.
Just-in-time shipping is a process whereby goods arrive as they are needed, saving recipients money by reducing their need to carry large inventories.
The personnel staffing market has been changed dramatically by the rise of online websites such as monster.com, theladders.com, and jobs.com, where companies will list their available jobs, eliminating the need for a traditional personnel staffing company.
Future Outlook:
Due to the variety of companies and services that are contained within this industry, it is very hard to make estimations on trends for the industry as a whole. For this reason, only select markets within the industry are highlighted.
For security firms, demand is shifting towards technology based security systems, especially those that have wireless monitoring capability and integration with other automation companies need such as fire alarms and closed-circuit television systems. An increase in corporate activity, such as mergers or acquisitions, in many other industries over the last year has signified a growing need for legal services. The breadth of globalization and the maturation of a technology based workplace are expected to increase the demand for consulting services; a service that is extremely advantageous as experts are well trained and keep up-to-date on latest technologies, government regulations, and management and production techniques. Companies are realizing that it is better to hire experts early on, rather than waiting for companies to run into major roadblocks later. Finally, despite problems caused by cost pressures, growing demand for air shipping will have a positive effect on logistics and shipping companies.