Executive Summary

All businesses require a range of services in order to function effectively. Government data (Business Monitor PA1003) shows that in 1993 there were in the region of 1.7 million businesses (or legal units) which provide the universe of customers which companies offering corporate services can target. There are a large number of such services available to British companies. Many are small industries and very poorly documented. This report reviews 12 of the largest, each with turnovers running into billions of pounds sterling. In the case of nine of these services, namely accountancy, business travel, contract catering, contract cleaning, courier and express services, factoring and debt management, insurance broking, legal services, and security services, their combined turnover in 1993 was an estimated £61.4bn. Key Note forecast this to rise to £76.7bn in 1997 and £90bn by the year 2000. The prime influence upon the fortunes of corporate services and their future prospects is the economic climate.

Research, specially commissioned by Key Note in April 1994, among 408 companies with turnover exceeding £1m per annum, showed that in insurance broking (87%), legal/solicitors (82%) and courier and express services (76%), the great majority of companies use outside agencies only. Conversely, the majority of companies only use their own internal staff for payroll and factoring (79%), quality assurance (76%), storage/warehousing (72%), and accountancy (61%). A mixture of outside agencies combined with internal staff is usually the pattern for services such as trademarks and patents, catering, cleaning and sanitation, business travel, security and temporary staffing.

There were 17,840 firms providing accountancy services in 1993, of which Coopers & Lybrand, KPMG Peat Marwick, Ernst & Young, Arthur Andersen, Price Waterhouse and Touche Ross are the largest. Total fee income in 1992/1993 was £4.4bn. This is forecast to rise to £4.48bn by 1997 and reach £5.5bn by the year 2000.

Business travel services were supplied by nearly 5,200 firms in 1993, led by Thomas Cook, Hogg Robinson (Travel) Ltd, American Express, Wagons-lits Travel and Carlson. Expenditure by companies on business travel totalled £19.6bn in 1993. This is forecast to rise by 12% to £22bn by 1997 and reach £25bn by the year 2000.

There were nearly 2,500 firms providing contract catering services in 1993. Gardner Merchant is the leader followed by the Compass Group and Sutcliffe Group. The market was worth an estimated £2.5bn in 1993 and it is forecast to grow by 32% by 1997 reaching £4bn by the year 2000.

Contract cleaning was supplied by just over 5,500 firms of which companies comprising BET Cleaning Services together has the largest turnover. ISS Europe Ltd, Office Cleaning Services Ltd and Pall Mall Services Group Ltd are major players in a crowded market. The 1993 market was worth £1.46bn and this is forecasts to grow by 34% to £1.95bn by 1997, reaching £2.37bn by the year 2000.

In the courier and express market, the biggest players are Parcelforce, Securicor and TNT Express with UPS/Carryfast growing rapidly and already ahead of Lynx. The total market was worth nearly £2bn in 1993. It is expected to grow by 10% to £2.15bn by 1997 and reach £2.3bn by the year 2000.

There were 5,759 firms defined as employment agencies and staff bureaux in 1993. Manpower is the leading player ahead of Reed, Aida and Brook Street Bureau.

Over 10,000 companies used the services of the Association of British Factors & Discounters in 1993. The top five factoring companies account for 70% of the market. These are International Factors, Alex Lawrie Factors and Barclays Commercial Services. Total factoring and discounting turnover reached £19.7bn in 1993. This is forecast to grow by 41% to £27.7bn by 1997 and reach £33.2bn by the year 2000.

There are 127 registered insurance broking companies in the UK. Sedgewick Group and Willis Corroon Group head the list well in front of the other players. Total 1992/1993 sales by the industry were £3.22bn. This figure is forecast to grow by 22% to £3.92bn by 1997 and reach £4.55bn by the year 2000.

Over 19,400 firms provided legal services in 1993. Most practices are small. 96% have fewer than ten staff and 82% have four or less. Clifford Chance (£210m) Link Laters & Partners (£154m), Freshfields (£135m) Lovell White Durant (£120m) are the biggest firms. Fees earned by private practices totalled an estimated £6.4bn in 1992/1993. These are forecast to rise by 30% to £8.32bn by 1997 and reach £9.8bn by the year 2000.

There are some very large companies involved in freight transport and distribution activities. The three giants in this market are NFC, LEP Group and Ocean Group with turnovers of above £1bn each. The logistics and transport sector is estimated to be worth £16bn. Distribution costs are forecast to rise from around £3.16bn in 1993 to £3.37bn by 1997, reaching £3.52bn by the year 2000.

The principal companies supplying security services to the private sector are ADT, Automated Security Holdings (ASH), BET, Mayne Nickless, Racal Security, Reliance, Scantronic, Securicor, Securiguard and Thorn Security & Electronics. The market was worth £2.15bn in 1993. It is forecast to grow by 30% to £2.8bn by 1997, reaching £3.25bn by the year 2000.

The leading companies in the long-term vehicle leasing market are PHH Vehicle Management Services, Cowie Group, Evans Halshaw Holdings, Tiphook, Henlys Group and the four subsidiaries of United Dominion Trust. The total market in 1993 was worth between £20bn and £25bn, including petrol in terms of the cost of fleet vehicles. The total UK fleet size of 1,341,100 vehicles in 1993 is forecast to fall by 3% to 1,300,000 by 1997 and then fall again to 1,250,000 by the year 2000. This fall is attributable to recent Government policy aimed at making the company user a much less attractive `perk'.

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