Business services are the companies behind the companies. They are the partner firms that help others run smoothly, from managing facilities to recruiting staff.
The sector has had to navigate an increasingly complex operating environment in recent years. For some, that has created problems. Freight and logistics, for example, has been forced to absorb relentless external shocks, such as border friction from Brexit and blockages in the Strait of Hormuz. For others, it has opened up opportunities. Take the testing, inspection, certification, and compliance (TICC) subsector, where increasing regulatory complexity has led to demand outstripping supply.
For all business services firms, however, future success will mean confronting some big questions. Here, we asked industry insiders for their take on four...
The big question: How can facilities management companies stand out in a crowded field?
The facilities management (FM) sector coordinates and maintains physical environments, such as workspaces and public infrastructure. As a nondiscretionary business cost, facilities management benefits from dependable, recurring revenue. But the market is not without its challenges. Andrew Hulbert, chair of the Institute of Workplace and Facilities Management, estimates that the sector comprises more than 123,000 service providers, 93 percent of which turn over less than £1 million ($1.3m). This level of fragmentation means businesses have to work hard to stand out.
In response, firms are adopting a number of differentiating strategies. One key approach is to offer value-added services based on a building’s data. By deploying internet of things (IoT)-enabled building management systems and digital twins, FM firms are helping optimize energy efficiency, streamline ESG reporting, and replace rigid, timed maintenance schedules with a predictive approach that minimizes downtime. Occupancy analytics can also be powerful, helping clients use office space more efficiently.
But standing out is not just about winning business. It’s also about winning staff. In a sector where recruiting can be a challenge, being known as an employer that cares about its staff can not only be a point of difference but also translate into better commercial performance. “People think they can bring in a ‘co-botic’ solution and drive productivity, but if you've got a motivated, engaged workforce who believe in the business and care about the clients, productivity levels go through the roof,” says Chris Wisely, group CEO at facilities management firm Atlas FM. “The best innovation you can put in is how to engage people.”
The big question: How can freight and logistics businesses maintain margins as costs continue to rise?
Freight and logistics firms are feeling pressure from multiple directions. Geopolitical disruption has caused delays, administrative bottlenecks, and higher operating costs, particularly due to the increasing price of fuel. At the same time, supply chain networks have grown ever more intricate. E-commerce now represents more than 29 percent of UK retail sales, causing a shift away from bulk, single-destination deliveries, towards high-frequency, multistop routes and a new layer of complex ‘reverse logistics’ to handle returns.
The answer? “Investment in technology,” says Ben Garratt, interim policy and communications director of trade association Logistics UK. He sees this as key to improving efficiency and maintaining margins. “It is increasingly nondiscretionary.”
A number of technologies are proving to be especially effective. One is equipping warehouses with IoT technology to enable predictive analytics and dynamic inventory management. Another is route optimization, with a view to reducing fuel consumption and empty running—and Garratt says there’s potential for this to become even more sophisticated as we get better road-level data. “A more granular understanding of roads and restrictions, including details about whether cars are parked on either side of a narrow road, can ensure that firms are using the right vehicle for each job.”
The big question: TICC is a hotbed of M&A. But can rigor survive rollups?
TICC companies provide independent verification to ensure products, processes, and infrastructure meet all necessary safety and quality standards. They do this via lab testing, site inspection, and product certification.
A tightening labor market and technical skills deficit mean demand has been outstripping supply. What’s more, the legal requirement for human inspection provides a degree of resilience against AI-related disruption. This has made the sector attractive to private equity, and companies are increasingly growing through M&A deals. Because the TICC market is so fragmented—70 percent of firms have fewer than 50 employees—the opportunity is considerable and the trend is likely to continue.
For businesses within the sector, there are tangible benefits to operating at scale. However, there is a potential tension. Scaling is often about doing more things in a more efficient way, but rigor is about deep domain expertise and prioritizing accuracy over speed.
This is perhaps why research suggests that the greatest advantage is gained through ‘specific scale’—scale within a specific activity. This doubles down on expertise rather than diluting it. “I think the businesses that will succeed are the other ones that are really acquiring with a clear focus and intention in their M&A,” says David Harrison, cofounder and CEO of testing and compliance firm Certek. “Identifying the right businesses, using AI tools to make them better, and really nurturing each new company in the group.” As the market evolves, Rob Brand, head of business services sector at HSBC UK, expects some larger firms to divest businesses that no longer fit their core focus.
The big question: How can recruitment firms grow in a soft market?
The recruitment sector has been on a rollercoaster these past few years. In the post-pandemic era, business was booming, but since then, the UK labor market has cooled and hiring intentions have plummeted, hitting a five-year low in 2025.
Ishtah Kadel, head of Europe at executive search firm Finatal, says that this environment is less favorable to high-volume generalists competing on price. Instead it favors specialist firms with deep market knowledge that can better guarantee quality hires and act as strategic talent consultancies. “The market is definitely becoming more demanding and selective, and we've had to mirror that,” says Kadel.
Another growth opportunity altogether is to take advantage of more buoyant economies overseas. “If you're successfully able to launch your proposition into those markets, it's another growth avenue when times in the UK are perhaps a little bit tougher,” says Brand. “And it’s a really clear, quite low-risk journey for recruitment firms to take.”
Read our full report on UK Business Services, covering the current situation, future outlook and more here: