- The global business services industry posted strong and resilient growth between 2019-23, according to new findings from PwC’s Global Business Services Index 2024.
- Top performing sectors were logistics and distribution, business process outsourcing, professional services and digital and education services
- All eight service sectors contained in the index post full year growth in 2023 vs. 2019
The business services industry recorded global growth, primarily driven by growth and profitability in logistics and distribution, legal and professional services and digital and education services. This is according to PwC’s Global Business Services Index (GBSI), which measures and tracks the performance of 247 leading international companies, across eight key service sectors, analysing four dimensions: growth, profitability, productivity and cashflow.
The eight service sectors contained within the index are logistics and distribution; business process outsourcing (BPO); testing, inspection and certification (TICC); human capital management (HCM); digital and education (D&E); built environment services (BES) as well as legal and professional services.
Compared against the base year of 2019 (Index 100), the eight sectors have shown strong performance as a whole, reaching 115 as an aggregated index for the business services industry. The strongest performing sectors were logistics and distribution (sector index score 124), BPO (119), digital and education (118), and professional services (118).
Business Service Sectors with their overall 2024 index scores and sub-category scores. Base year 2019 = 100. Source: PwC Global Business Services Index 2024.
Sector performance and drivers for growth
As the top-performing sector, logistics and distribution showed industry-leading improvements across growth (dimension score 157), profitability (121) and cash flow (120), partly due to supply chain disruption driving demand during the pandemic. Within profitability, most businesses saw growth in margins by passing on higher costs to customers and leveraging excess capacity, but investments in tech solutions and process innovation are enabling them to stay profitable and productive in the long-term.
Business process outsourcing continued to display resilient growth, with customers continuing to use managed services to optimise costs and leverage expertise. At 152, growth was the dimension contributing to the strongest improvements for the sector, above the business services industry average of 142, driven by geographic expansion and acquisitions. BPO also showed the strongest productivity improvements at 105, which continues to prove the hardest industry performance dimension to get right.
Digitalisation of training content and ever-growing demand for data and intelligence has benefitted the digital and education sector, which ranked as the joint-third highest performing sector on the index at 118. Its greatest improvements were with growth (150) and profitability (117) dimensions, mainly due to an increase in online education and growing needs for career-focused upskilling, and margin improvements linked to the scaling up of digital content.
Also joint-third was professional services, which saw strong growth (dimension score 149) and improved profitability (114) due to more diversification into high-margin and high-growth segments such as energy, analytics, generative AI and cloud technology, to offer cost optimisation solutions. Rising demand for specialised offerings has prompted consultants, auditors and risk firms to provide more niche services to clients at higher margins. Both Legal and Professional Services are investing in AI, data infrastructure and new services and to enhance capabilities, which are yet to fully demonstrate productivity benefits.
The testing, inspection and certification sector has experienced strong and cash generative growth over the last four years, making it attractive to outside investors and driving M&A activity. With an overall sector index score of 116, the main improvements were witnessed in growth (dimension score 138) and strong cash flow (116), mainly due to innovation in diagnostics, ESG and other new segments.
Mark Anderson, Global Business Services Sector Leader at PwC said:
“The scale of the economic and social impacts of the business services industry are hugely underestimated. Our latest research shines a light on the breadth and depth of the industry, as well its resilient performance. Services firms are playing a crucial role in wealth and job creation, education and training. In addition to driving their own performance through improved and innovative service offerings, they are enabling other industrial companies by offering solutions that help streamline operations, optimise resource management, and enhance strategic planning.
“Overall, performance across the index has been robust, with particular bright spots driven by growth and profitability in logistics and distribution, legal and professional services, and digital and education services. TICC businesses have been highly cash generative over the period, making them attractive to private equity and other investment activity. Productivity remains the most stubborn performance measure to get right across all the sectors, but approaches that organisations are taking in the best performing sub-sectors, such as BPO, might be transferred to others.
“Professional and Business Services have been rightly named as a priority sector in the UK Government’s Industrial Strategy. The sector has world-leading capability in areas such as legal and professional services, and with continued investment it can be a key driver of future growth.”
The eight sectors ranked by their overall index performance were: logistics and distribution (124); business process outsourcing (119); digital and education & professional services (both 118); testing, inspection and certification (116); legal services (110); built environment services (109) and human capital management (101).
About the research
PwC’s Global Business Services Index presents an outside-in view of the Business Services Industry and the performance of eight key sectors: Logistics and Distribution, Business Process Outsourcing, Testing, Inspection and Certification, Human Capital Management, Digital and Education Services, Built Environment Services, Legal Services; and Professional Services.
The performance of each sector is measured by the ‘Sector Index Score’, which has been developed based on an analysis of key metrics for a sample set of companies. This score considers four key dimensions and 8 metrics (2 metrics in each dimension), as outlined below:
Growth – Revenue; EBIT - USD million
Profitability – Gross margin; EBIT margin
Productivity – Revenue per employee (USD); Asset turnover ratio
Cash flow – OCF ratio; Quick ratio
The Global Business Services Index is based on an aggregate of the eight sector indices (considering a total sample of 247 market leading international companies and firms). Average business services industry scores, per dimension: growth (142), profitability (109), productivity (102) and cash flow (105).
Sector definitions
Built environment services
Facilities and real-estate management (Providers of facility management, building and landscaping services, and real-estate consultants)
Security solutions (Providers of physical and digital security solutions)
Waste management (Providers of waste disposal and management services)
Contract, Catering and cleaning services.
Business process outsourcing
Technology business process outsourcing (Providers of pure play BPO services that focus on technology-related functions – e.g. IT, tech support)
Non-technology business process outsourcing (Providers of BPO services that focus on non-tech functions – e.g. admin, finance, operations)
Digital and education services
Education services (Providers of learning and upskilling services, excluding institutes and universities)
Data providers (Providers of data and specialised digital services)
Human capital management
Recruitment solutions (Third-party service providers specialising in permanent recruitment services)
Staffing solutions (Providers of temporary or contract staff as needed)
Legal services
Legal service providers (Law firms providing services such as legal advice, document review, contract management, legal research, e-discovery, compliance support, and other legal tasks)
Logistics and distribution
Logistics providers (Providers of delivery, logistics and transportation services with B2B focus)
Distribution and wholesale (Providers of distribution services and wholesalers)
Supply chain solutions and freight arrangement (Providers of supply chain solutions and freight forwarding services)
Professional services
Consulting, tax and audit firms (Providers of consulting, auditing and risk services)
Testing, inspection and certification
Inspection and certification (Providers of testing, inspection certification services for building, materials, etc. to verify compliance standards)
Healthcare diagnostics and testing (Providers of testing and diagnostic services for healthcare sector)
About PwC
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