Sink or swim
Why the tide has turned for the global business services sector - OC&C's B2B 200 Index 2015
Wednesday 19 August 2015Report
Too many of the world's leading B2B Services firms are at risk of revenue and margin decline - and only a few are acting with sufficient aggression to pursue their next wave of profitable growth.
Business to Business (B2B) Services is one of the world's largest and yet most under-reported, markets. However it provides the foundations of a substantial part of the broader economy - as it includes construction, outsourcing, marketing, workplace services - and hence its sheer scale can surprise the uninitiated. Despite often operating in highly fragmented markets, the 200 companies that we focus on in this report alone have combined revenues of £1.5trn ($2.3trn).
For the UK and many European players, the sector is disproportionately important. For many years, European firms have led the world in delivering innovative outsourcing propositions and sustainable competitive advantage. This sector accounts for almost 30% of the UK economy and over half of its growth. It is one of the UK's primary exports and its medium term vitality will be critical to continued economic recovery.
Traditionally B2B has outperformed other sectors. Resilience during the recession catapulted B2B stocks onto every serious investor's agenda, accompanied by increasing recognition of the certainty provided by contract-based business models with high visibility of forward revenues. yet in this edition of OC&C's annual B2B Index we find that the sector has failed to respond to the 'Global Warning' we issued in last year's B2B Index report.
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Global warning
The B2B Services sector is diverse but contains some of the world’s most successful businesses. Leading players are capitalising on waves of outsourcing
Consolidation prize
B2C Services is big business – around £80bn in the UK alone – but in contrast to retail, most B2C services markets are highly fragmented: the top players in aggregate often account for less than 20% of share, and independents thrive
Higher and higher
As Western economies are showing hesitant growth paths and uncertainty is freezing investment plans, growth options are dwindling for multinational companies (MNCs) and many heads are turning to China
Pricing for profit
Companies tend to set their prices too low in the business-to-business market. Regardless of pricing policy, some customers end up paying a price that is not justified by the amount they buy or the costs that they incur