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Key economic role for business service providers 

10 November 2015 | James Richards


Business services organisations are playing a vital role in the development of regional commercial hubs and are easing the process of political devolution, according to a report.

 

Figures in the Business Services Association’s annual report show that 3.3 million people (one in 10 UK workers) are now employed by outsourcing organisations. The sector accounts for 9.3 per cent of Gross Value Added (GVA) to the UK economy (a measure of the economic contribution of a specific sector).

 

Seventy per cent of outsourcing activity takes place in the private sector and 30 per cent in the public sector.

 

The report puts facilities management’s contribution to the economy as a whole at £18.3 billion in GVA annually.

 

Unlike manufacturing or financial services, which cluster by region, the outsourcing industry is evenly distributed across the UK. The report says outsourcing providers contribute between 6.7 per cent and 12.4 per cent of regional GVA, suggesting that the growth in business services benefits every region.

 

In local government outsourced contract values have increased 15 per cent year on year, while energy utilities contracts grew 187 per cent.

 

Outsourcing organisations are able to bring expertise and innovation gained from their contracts in different regions to assist the newly empowered regional governments and local authorities. This translates into significant savings through the faster application of good practice.

 

Benefits are felt at the community level with increases in local employment, training and investment.

 

Also, potential for growth in the sector remains high. In 2014, 55.5 per cent of the £6.65 billion outsourcing contracts agreed were first-time deals, up from 33.5 per cent in 2013.

 

The figures in the report were taken from a variety of sources including Oxford Economics The UK Market for Business Services 2013-January 2015, and arvato UK Quarterly Outsourcing Index, 2014 summary.