Professional and business services
The UK is a leading provider of professional and business services (PBS), viewed as a global centre of excellence for innovation in business process outsourcing (BPO).
The PBS sector is one of the largest and most successful in the UK, employing 14% of the workforce. With access to advanced professional skills, technological innovation in the sector creates high growth and provides opportunities for incumbents and new entrants. The government works closely with the sector to attract and develop the best talent across the country, with expertise ranging from accountants to architects, lawyers to engineers, recruitment to advertising, and administration to consultancy.
Net zero and environmental services
The UK government plans to build back greener following the pandemic, enshrining its target to cut emissions by 78% by 2035. This incorporates the UK’s share of international aviation and shipping emissions for the first time.
Companies in the UK are making environmental, social and governance principles (ESG) a priority to support the net zero target and to maintain competitiveness on the global stage. Environmental consultancy is a growing market in the UK. Industry revenue reached £2.2 billion for 2021 to 2022 and is expected to rise at a compound annual rate of 2.1% over the next 5 years. PBS firms enable the wider economy to meet their net zero targets, from energy-efficient building design to providing legal advice for green projects.
The Cloud, robotics, artificial intelligence (AI) and big data are enabling a digital transformation across the PBS sub-sectors, allowing innovative companies in areas such as HRtech, legaltech and regtech to flourish. Capital availability, growth potential and access to global professional services providers offer a real opportunity for new entrants in these emerging sectors. Especially when combined with the UK’s strengths in technology and a nationwide pool of talent.
Business process innovation
Technological innovation, accelerated by the pandemic, is improving productivity, simplifying processes, creating more resilient supply chains and increasing outsourced business operations. With a global reputation and access to a highly skilled workforce, the UK has developed a solid position as Europe’s leading location for business process management. This provides significant opportunities for international firms to establish innovation centres, creating digital business transformation for clients.
International professional services
The UK is the second largest exporter of business services in the world. It is home to 5 of the top 15 global law firms and 3 of the ‘Big 4’ global accountancy and consultancy firms. The UK is an ideal base to grow an international professional services firm. It has access to an array of new services and digitally focused free trade agreements (FTAs) and trading frameworks. It also benefits from London’s status as the world’s leading international financial centre.
The PBS sector is an integral part of the economy and accounts for 12% of the UK’s gross value added (GVA). There are around 635,585 registered PBS enterprises in the UK. These employ 4.6 million people, generating a collective turnover of £464.9 billion and £96 billion worth of exports.
The size and significance of the PBS sector is important to the overall UK economy. The UK government is seeking to link the sub-sectors and their representative bodies into strategic national initiatives around innovation, skills and policies such Levelling Up and Net Zero.
Key UK assets
There are several important clusters of PBS activity across the UK.
South of England
The top 50 law firms all have a presence in London, based on the international recognition and reputation of English Law.
Birmingham has a major accounting cluster and is home to a fast-growing ProfTech supercluster, accelerating market disruption and technological adoption. There are more business, finance and law graduates in Birmingham than in any other city-region outside the capital. The Midlands cluster of legal, accountancy and management consultancy firms are amongst the largest in Europe, with 75,600 employees.
The North East has a thriving BPO and shared services centre (SSC) cluster. Some of the industry’s largest firms operate there, including Concentrix, Res-Q, Sitel, Teleperformance, and Accenture. Manchester is a significant legal services centre, home to firms such as DLA Piper, Eversheds Sutherland and Latham & Watkin.
Edinburgh has a strong PBS ecosystem. The sector is identified in Scotland’s Economic Strategy as a growth sector for the country to build on its existing comparative advantage and increase productivity. Environmental legal services will become an important feature of Scotland’s offer, with COP26 held in Glasgow highlighting the country as a leader in environmental matters.
Innovative PBS companies are eligible for the government’s research and development (R&D) tax relief scheme. The scheme allows up to 33.35% of a company’s R&D spend to be recovered either as a reduction in Corporation Tax or a cash repayment.
SuperTech is the first ProfTech supercluster in the UK, creating work and innovation across the ProfTech industry. It nurtures and supports a thriving ecosystem in the West Midlands.
Innovation Hubs include:
- Tech Nation’s LawTech UK, which is an initiative between Tech Nation, the Lawtech Delivery Panel and the Ministry of Justice, to support the digital transformation of legal services
- Freshfields Hub in Manchester, which applies cutting-edge tools (including document automation and AI) to legal tasks
- Bain Digital Innovation Hub in London, which enables businesses to work with digital experts and a startup network to brainstorm and explore innovative technologies within PBS
Business and government support
In June 2021, the government piloted a funding scheme to support PBS regulators and professional bodies to provide services overseas. Successful applicants are funded in arrears to reimburse 80% of the eligible costs they incur.
In 2019, the government announced £2 million to support the LawTech Delivery Panel. This embraces the opportunities of LawTech, and encourages innovation to grow the UK legal sector.
The government funds UK Research and Innovation (UKRI). Through Innovate UK, funding opportunities are available to support highly innovative small and medium-sized enterprises (SMEs) and large businesses. These funds can range from £25,000 to £10 million.
London-based SeedLegals offers a LawTech platform to help companies close funding rounds faster. Now used by more than 25,000 companies, it is the largest closer of funding rounds in the UK. The company is expanding across the world, with operations in Singapore, Hong Kong, and Ireland.
Headquartered in the US, global company Hubspot offers a full platform of marketing, sales, customer service, and customer relationship management (CRM) software. In 2021, Hubspot announced plans to set up an office in the UK, creating 70 new jobs, to serve the 10,000 businesses already using its software.
French company Payfit is a leading payroll and human resources (HR) management solution for SMEs. Counting Revolut, Starling Bank, and Treatwell among its customers, it has offices across Europe, and opened a London office in 2019. With Payfit’s latest capital raise of €254 million, the company reached a €1.82bn valuation.