It is a well-known fact that small businesses are the engine of the economy.
In the UK for example, 96% of all businesses are Micro businesses (1-9 employees). In Gibraltar too, small and micro businesses account for the vast majority of businesses and span every sector of the economy, from retail to consultants, travel agents, mechanics, technicians, trainers, medical practitioners and more. Gibraltar evolved into a service dominated economy mainly from the 1980s following the diminishing presence of the UK’s MOD on the Rock and the decline of the local shipbuilding and fishing industries.
According to Britannica encyclopaedia “a Service industry, is an industry in that part of the economy that creates services rather than tangible objects. Economists divide all economic activity into two broad categories, goods and services. Goods producing industries are agriculture, mining, manufacturing, and construction; each of them creates some kind of tangible object. Service industries include everything else: banking, communications, wholesale and retail trade, all professional services such as engineering, computer software development, and medicine, non-profit economic activity, all consumer services, and all government services, including defence and administration of justice. A services-dominated economy is characteristic of developed countries. In less-developed countries most people are employed in primary activities such as agriculture and mining”.
Based on data from the latest Gibraltar Employment Report from October 2018, the private sector Services segment employed 19,735 people in Gibraltar, out of a total Private sector jobs of 23,969. That’s equal to 82% of all private sector jobs in the economy.
The Top 4 Services segments in the Private sector, in terms of employment are:
1. Real Estate (non-construction) & Business Activities – 3,810 Jobs
2. Wholesale and Retail Trade – 3,560 Jobs
3. Financial Intermediation – 2,189 Jobs
4. Hotels/Restaurants – 2,122 Jobs
While the growth in the Services sector, worldwide, is a fairly recent phenomenon, of the last 40 -50 years, this
sector is expected to continue and grow as development progresses and economies become more and more developed. Going forward, some of the key trends faced by the Services sector include:
• Clients increasingly want service providers to deliver defined business outcomes. They ar, e no longer satisfied with not being able to reconcile traditional service
level performance metrics against the outcomes they wanted from the service. This is forcing providers to re-think the way they take managed services to market and are forcing service providers to evolve the style of engagement and the functions they offer.
• Clients expect service providers to include innovation in their services. Beyond simply delivering a service ever-more cost effectively, they want the provider to co-create innovation, in both market-facing and internal operations.
• Practically every company has a strategy to digitalise its business, either to improve the customer experience or achieve greater efficiencies in business processes – sometimes to develop an entirely new business model. At the same time, the technologies they’re using to execute these strategies are themselves evolving at a rapid pace.
• Customisation and personalization of service- providing a personalised level of service is one of the key differentiating factors that service providers aspire to achieve.
• Multi-channel engagement – clients nowadays expect to be able to communicate with service providers through a variety of channels beyond the traditional phone and post, such as Chat and social media channels.
• Environmentally friendly service • while “green” production has long been a key pressure in the manufacturing and primary sectors, Service businesses too are nowadays under scrutiny by their customers to deliver the services in a more environmentally friendly manner.
• Equality – the inclusion of the ”Other” in the workplace is one of the growing social pressures affecting Service providers, particularly in Western economies.
• Companies are increasing their use of consultants to help them align technology with business strategy.
Aligning technology to business strategy has always been important and companies often use the services of independent third-party consultants to help them do this. This trend is expected to increase due to the continuous change and increasing complexity in both business strategy and technology.
As we start 2020 it is important for business owners and managements to stay ahead of the competition by adding these trends into their strategies and targets. By being aware of the latest business news and trends, it’s easier to grow company sales, offer better customer service, and operate more effectively.
Written by Eran Shay, Managing Director at Benefit Business Solutions