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Getting business services back to business

The coronavirus pandemic has presented an array of challenges for the companies that support other businesses with facilities management, recruitment and technical services. Andrea Delay, UK Head of Business and Professional Services and John Aldred, Industry Director of Business and Professional Services share how the sector is adapting in unprecedented times, with the bank's support.

Business services insights

Across the UK, the business services sector employs 3.3 million people and adds an estimated value of £1.2bn to the economy. The sector encompasses a range of industries including facilities management, recruitment, business process outsourcing and technical services.

The challenges that businesses are facing in the business services sector are very dependent on the sub sector they sit within

Andrea Delay

UK Head of Business and Professional Services

The recruitment sector has had to contend with the impact of lockdown travel restrictions, which led many businesses to close or downsize their workforce, and others to put new hires on hold. Delay says: “The market sentiment will vary, and their ability to bounce back to a position of growth will depend on the sectors they support and the speed with which businesses recruit. There is an expectation that part-time vacancies and short-term contracts are to be expected, rather than full-time positions.”

While some sub sectors like the waste services industry have “experienced massive disruption”, others have been less affected. For example, Delay says, “business process outsourcing has seen a slowdown in tenders for larger projects but is generally experiencing encouraging behaviour from buyers to support their critical suppliers and ensure business continuity.”

Discussing the effect on facilities management companies, John Aldred said: “The impact of coronavirus has largely depended on the return to work prospects of the sectors in which their clients operate. Those working with the aviation, leisure and commercial property sectors have seen a reduced demand for services – and even where there have been contractual commitments, many have been unable to continue services due to lockdown and social distancing requirements. Those with clients in food retail, warehousing and distribution centres and healthcare have seen increased demand for services, especially cleaning and security.

“Discretionary spend and project work, for example in the mechanical and engineering space, has reduced and whole divisions and teams have been furloughed. Often this is where the profit margins are made in contracts over and above the standard maintenance activity. Having said this, many mechanical and engineering firms were detailed as essential workers in order to keep buildings running for basic maintenance and compliance work.

Terry Myatt, Relationship Director for the Business and Professional Services team says: “Different service lines have seen a varied impact and this is reflected in a recent IFM.net survey^ in which 43% of facilities management managers labelled the current environment difficult with limited opportunity, but 40% labelled it as positive with plenty of opportunity.”

For property management businesses, says Aldred, residential clients have “generally continued to maintain the same number of units and blocks. Whilst it is expected there will be some push back on quarterly invoices raised, as for example the same level of cleaning has not occurred or a property manager has not been on site, it is expected to be minor and small discounts may be offered."

Empty offices and other commercial properties during the pandemic have been an evident challenge for businesses in the sector. Aldred says: “Commercial property managers will often gain revenue on a percentage of rent collected and we have seen rent discounts and holidays put in place between landlords and tenants, meaning this revenue stream is reduced. Those with surveying services have been heavily impacted during the lockdown and furloughed large numbers of staff as people are not allowed on site and demand for project work is greatly reduced. However, it is expected this area will recover as building owners consider getting tenants back in a socially distanced way.”

Future outlook

But, many of these services could be more relevant than ever as the UK lockdown eases and businesses review how they might use their buildings in the future. “What we are starting to see already is some advisory consultants in the sector having conversations around alternative usage – how might offices look in the future, what kind of protection needs to be implemented?

“The biggest challenge is to be nimble, to continue to be alert to changes in the sector, think proactively and understand how you can repurpose your offering or pivot it.”

Delay adds that several Barclays clients have already adjusted their strategy to offer new products and services:

We are proud to say we have seen our clients encouraging social purpose projects, including leveraging their contacts to switch their production temporarily.

Helping clients return to normality, grow and expand

As the first UK bank to launch a dedicated team for business services, Barclays is uniquely positioned to provide expert support and industry insights to clients during this period. From government-backed schemes to innovative partnerships, the bank is offering a wide range of services to help them stay resilient.

Barclays is also offering clients a wealth of online resources including webinars on topics ranging from fraud awareness to business resilience and access to online support from Eagle Labs – the bank’s innovation hub for startups and entrepreneurs.

The bank is continuously evolving to meet the changing needs of clients during this period of uncertainty, and while the long-term impact of the pandemic on the business services sector remains unknown, Barclays is “at the forefront of these discussions” and ready to “quickly interpret trends and respond rapidly”, says Delay.

“We need to make sure that the clients we support are best placed to return to normality, grow and potentially expand relative to the new opportunities that may arise from the pandemic. Financially, we seek to provide support and guidance where required, and to help to make the process as straightforward and transparent as possible.”

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