March 27, 2024

The B2B Services landscape has experienced a remarkable and sustained expansion over the past decade, driven by a fundamental shift in approach with a growing number of companies choosing to focus on core competencies, whilst outsourcing non-core activities to specialised B2B service providers. This strategic reorientation has driven the growth of the B2B Services markets and led to profound changes within these industries.

Strategic Reorientation of the B2B Services sector 

The B2B Services sector is undergoing significant transformations driven by several key trends.  

New constraints on skilled labour in the B2B Services sector 

Demographic shifts and automation are creating a talent crunch, increasing concerns around talent retention and upskilling of the workforce, particularly in segments with increasingly demanding service requirements. 

Inflation as a “scissor crisis” in the B2B Services sector 

Furthermore, the current inflationary environment presents businesses with a “scissor crisis”.       As inflation triggers increases in wages and salaries, it puts pressure on profitability while clients simultaneously seek to reduce costs. To navigate this challenge, Business Services companies need to demonstrate their value to clients in order to justify price increases and adopt cost-tracking activities to ensure sustainable profitability. Furthermore, refining pricing strategies becomes critical for revenue growth. 

Digitalisation accelerating in the B2B Services sector 

A longstanding driving force for corporate processes, digitalisation is now impacting all operations and has emerged as a key lever for operational efficiency – particularly for decentralised Business Service companies. The tech transformation of Business Services is here to stay, fueled by evolving customer needs and the potential of artificial intelligence. 

Wave of consolidation of the B2B Services sector players 

This historically fragmented sector, with numerous local players often established through spin-offs and facing low barriers to entry, has been undergoing a wave of consolidation since the Covid pandemic emerged. Business Services companies are pursuing M&A to achieve various objectives, including expansion of geographic reach and service offerings, the need to address new segments such as digital services, the search for economies of scale, and the implementation of “multiple arbitrage” strategies.  

Forces shaping the B2B Services markets in 2024 and onwards 

In this short piece, we look at the transformative forces that will shape the Business Services market in 2024 and beyond. We explore the importance of specialisation, consolidation and digital transformation as drivers of success in this dynamic industry and take a closer look at the impacts of skilled labour shortages and margin pressures on the industry.  The aim of this paper is to provide insight into how companies can navigate and thrive in the rapidly changing Business Services landscape.  

Enjoy the read: B2B Services Trends 2024