The go-to destination: UK’s business and consumer services industry attracts global firms

An influx of overseas investors are taking full advantage of the UK’s thriving business and consumer services sector, and using it as a springboard for international growth

The UK has become a magnet for overseas companies from every sector and is viewed worldwide as a vital location for international investors. Year after year, Britain continues to prove that it means business and, despite the challenges caused by the worldwide financial crisis, remains the go-to destination for global firms.

When companies come to the UK, they grow. Figures from UKTI’s UK inward investment report 2009/10 revealed that the number of expansions of existing operations rose sharply – by nearly one fifth (inward investment activity for the year ending March 2010); and that many overseas firms use the UK as a base for their European and global expansion.

A popular area for investment is the UK’s business and consumer service sector — an industry which includes customer contact and shared service centres, employment services, event management, office services and supply, market research, recruitment, PR, advertising and management consultancy.

Recently, the Management Consultancy Association (MCA) reported that overseas demand for UK consulting services had increased in the first half of 2010. Indeed, management consultancy is one of the fastest growing sectors in the UK and is the largest outside of the US. In 2008, the UK consultancy market was estimated at nearly £10billion, representing 27 per cent of the total European market

Business and Consumer Services

The UK is also the world’s second largest market for market research (only the USA has a bigger industry). A research paper by B2B International — a specialist business-to-business market research consultancy — found that the UK market research industry is well-respected abroad: 25 per cent of all market research commissioned in the UK comes from international clients.

When it comes to Business Process Outsourcing (BPOs), the UK is the second largest recipient after India, with contact centres used extensively across both the private and public sector. There are around 958,000 people employed in just over 5,000 contact centres in the UK; and by 2012 it is estimated that there will be over one million people employed in this industry.

Major international BPO companies operating in the UK include Capgemini, IBM, Accenture, HP, Genpact, Stellar and ACS (owned by Xerox). In March it was announced that Etihad Airways, the national airline of the United Arab Emirates, has selected Manchester as the location for its newest contact centre.

Right positioning

In March, Xerox announced that it is expanding its digital imaging and printing solutions activities in the UK, through the acquisition of Livingston-based Concept Group.

“Channel expansion continues to be a key aspect of the Xerox strategy for Europe,” said Douraid Zaghouani, president of Indirect Channels Group, Xerox Corporation. “With Concept Group, we significantly increase our presence across the UK, bringing the right talent, the right coverage and the right positioning to this vital market.”

Other overseas investors taking full advantage of the UK’s buoyant business and consumer services industry include Alibaba, a business-to-business online marketplace from China, looking to increase brand awareness in the UK. In spring 2009, Alibaba launched its London office “making it even easier for UK companies to do business anywhere.”

Telecoms

A number of French companies in the business and consumer services sector have made their mark in the UK and internationally. 1000mercis, for instance, is celebrating its 10th year in business, having successfully expanded into the UK market, bringing its interactive advertising and marketing solutions to high profile, international customers.

Paris-based ARTTIC International Management Services set up its UK office, in Derby, in 2008, after securing a 40million Euro project for a consortium led by Rolls Royce, and financed partially by the European Commission within the FP7 programme. ARTTIC specialises in helping companies secure sought-after and valuable European Commission funding, and then manages these projects through to completion.

“We launched in the UK with me and a Project Manager,” says Ian Eden, the Senior Consultant running ARTTIC’s UK office. “Now we have four staff and a number of proposals for projects led by Rolls Royce. We have also been writing other project proposals for other clients. Last year, we wrote three proposals in the UK which have all been granted — two of which will be run from our UK office. So we have been doing extremely well. Our intention is to keep our permanent base here – and my remit has grown.”

French events company Options set up in the UK in order to win a strong share of the events support market. Options says that, together with Paris, London is the most popular city in Europe for running events: analysis shows that there are between 550 and 900 events run in London every day.

For Paris-based Criteo — a successful online advertising specialist founded in 2005 — the UK was an important market for a number of reasons. “Firstly, the UK has the biggest e-commerce market in Europe,” says Pascal Gauthier, Criteo’s Chief Operating Officer who spearheaded the company’s UK launch. “It also has the most mature market in terms of internet and online advertising in Europe. And it has the most competitive market.

“For those reasons, we felt that it was important to have a team here. The UK is a very interesting market between continental Europe and the US… and if your business works in the UK, it means it will probably work in the US, too.” Criteo has expanded fast and now has offices across the world, including New York and Palo Alto, California.

Going Global

Australian company Adstream — a global leader in digital advertising workflow services since 2001 — moved its headquarters to London in 2003, employing over 80 people. This was the first step in the company’s ambitions to break into Europe.

“At first, I was looking at setting up in either New York or London because these are world advertising centres,” says Gerard Barron, Adstream’s co-founder and Chief Executive Officer. “I chose the UK because it was a great cultural stop-off point between Australia and the rest of the world.

“Most importantly, though, it was a doorway to Europe where we saw big opportunities given the economies which exist across the EU.” Another factor for choosing the UK, says Gerard, was that London is a more manageable place in which to do business. “It’s still like a little community,” he says.

Yet London is also the financial hub of Europe and has been ranked first among Europe’s business cities for the past 15 years. This position has been made even stronger because of increased investment in the run-up to the Olympic Games in 2012.

After Adstream’s introduction to the UK, the company expanded and is now present in 16 countries across Europe. “It was fairly straightforward to set up our business in the UK,” says Gerard. “Finding talented people was easy, for instance.” The top five universities in Europe and four of the top six universities globally are to be found in Britain — so a pool of world-class talent is constantly available.

The UK’s approach to financial regulation and its relatively low-tax economy are other draws for overseas firms — and Adstream was no exception. “The UK tax regime was an important incentive for us,” says Gerard Barron. “Issues like this make it very attractive for entrepreneurs to come to the UK — and to stay.”