Professional services looking up

Thursday 29 August 2013

Contractors and freelancers work in a wide variety of industries, from engineering to the media. But it appears that those in professional and business services such as finance and accountancy, legal services and marketing could be heading into a particularly positive time, according to the latest research from the Confederation of British Industry (CBI).

In its most recent Service Sector Survey, CBI found that the business and professional services sector saw business volumes shoot up in the second quarter of this year. The balance of firms reporting better business compared to those registering decline was +20 per cent. In fact, they met CBI’s own expectations by increasing at the sharpest rate since November 2007, indicating that demand remains strong. Significantly, a balance of +26 per cent of businesses were also expecting volumes to keep rising in the next three months, demonstrating that the service sector is performing particularly well.

Indeed, companies generally performed well as a result of this rise in custom. Profitability among professional and business services firms managed to register the most dramatic improvement since February 2008, with a balance of +9 per cent. In the coming quarter, +15 per cent of firms were expecting to become more profitable still, pointing to a brighter future for professional services workers.

And the trend looks set to continue, with confidence riding high. Optimism about future business reached a striking 15-year peak at an impressive +36 per cent, shooting upwards at the fastest pace since November 1998 when the survey first began.

But for contractors, employment is a key statistic. Fortunately, a balance of +22 per cent reported that their workforce had grown in the past three months - the quickest rate of improvement since November 2007 - with +36 per cent expecting headcounts to keep growing. If these predictions are met, there could be plenty of opportunities available to freelancers and self-employed professionals in the sector.

Business growth is likely to increase demand for freelance talent, with +39 per cent of firms expecting to expand in the next quarter, the largest balance reported for more than seven years.

This may well be one of the factors in renewed opportunities for IT contractors, as the balance of businesses planning to increase IT spending rocketed from +6 to +21 per cent. As businesses grow and try to keep up with technological developments, it could be that more and better systems are required, keeping freelancers with IT expertise highly sought.

But it is contractors within the core professional and business service disciplines who may be the biggest winners, since it is clear that skills shortages are a constant cause for concern. Indeed, 17 per cent of respondents said that labour shortages might constrain their capital spending. If specialist knowledge and skilled workers are in short supply for these companies, they are more likely to turn to freelancers for support.

“We’ve seen a further build-up of momentum in the service sector this quarter, with business and professional services firms in particular seeing a turnaround in their fortunes,” says Stephen Gifford, CBI director of economics.

“Conditions remain tricky as households grapple with the prolonged squeeze on real incomes and business confidence remains vulnerable to any adverse developments in the global economy. But, all being well, business should continue to pick up through this year and into next.”

By Victoria McDonnell

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