Clear skies forecast for the service industry – when the focus is on technology, cyber security, data and expansion beyond Europe
It's natural with Brexit uncertainty that many companies are unsure in their investment planning. With no deal agreed yet (at time of going to press), a number of high-profile firms have said that the lack of clarity is playing havoc with their business plans. But there are still plenty of investments that make sense in almost any economic and political climate. For companies in the service sector, for example, there are certain areas that will always be fundamental for growth, and focusing on these is likely to bear fruit.
“Anything that relates to progressive or essential technology - cyber, data, blockchain - people are investing there. I think that will continue, because it’s an area in which people want to be involved. Whether you recruit in it or consult with it, it’s a key part of our economic ecosystem now,” says Nick Davis, a Partner and Head of Corporate at Mishcon de Reya.
In spite of Brexit concerns, a recent survey of senior finance decision-makers by SAP Concur found that more than half still planned to invest in IT infrastructure. Over 90 per cent of respondents recognised that automation solutions that streamline expenses, travel and invoices could free up companies to focus on strategy, allowing them to face whatever the future has in store.
Echoing this approach is the experience of fundraising platform Seedrs, which has seen investors continue to push money into start-ups despite the current uncertain climate. “We have seen a great deal of growth since the referendum in 2016, with our UK levels of funding and investment and with our European levels too. Last year we had businesses from 12 different countries raise on Seedrs including Sweden, France, Norway, Germany, Portugal and more as well as investment from 60 individual countries. This demonstrates there is an appetite there to use platforms like ours, and the uncertainty of Brexit hasn’t yet slowed that down,” said Seedrs Chairman Jeff Lynn.
Companies are also investing in their own technology, seeing it as a way to ride out market unpredictability by securing customer loyalty. Business leadership recruitment company In Touch Networks has just made a massive investment of both money and manpower in a new website and member portal. Its clients love the changes, which are already paying dividends, says CEO Matthew Roberts. “At In Touch, we eat, sleep and breathe technology, it’s the bedrock of our business and is by far the area we invest in most heavily,” he writes.
Using technology to streamline processes and structures is also an important way for service-sector companies to prepare for uncertainty, making them nimble and able to react swiftly to change.
“Tech companies are used to being reactive, facing disruption and challenges head-on and are less likely to be affected by the barriers, such as new tariffs and legislation, that physical trade will be subject to. Obviously, there are anxieties in the sector surrounding the Digital Single Market and the VAT area but the British government has prioritised finding solutions to these issues and I feel positive about tech’s prospects,” Roberts adds.
Global technology company Endava sees opportunities in uncertainty for those companies that invest in ways to make them more responsive to customer needs. “The right technology solutions that combine strategy, experience and engineering allow businesses, regardless of industry, to become more engaged with their customers, more responsive to market opportunities, such as those that will inevitably emerge from Brexit, and more efficient in the way that they operate,” says CEO John Cotterell.
Markets outside the UK can also offer avenues for growth in the service sector, helping to buffer against Brexit volatility. Endava merged with Velocity Partners at the beginning of last year, leveraging a strong Latin American presence and strengthening its global capabilities. “Together we are able to bring to clients more options in terms of service, technology, scalability and geography,” Cotterell writes. Endava has also recently announced a global partnership with Bain & Company to combine management consultancy and next-gen technology services the result of which is faster, more impactful business solutions for clients looking to quickly pivot and capitalise on changes in a volatile global marketplace.
In Touch Networks is also expanding, targeting the U.S. market, and it will open an office in Chicago this spring. “We see the global markets beyond Europe as holding massive potential and are being pre-emptive by tapping into that ahead of our competitors,” said Roberts.
It is clear that uncertainties over Brexit could still pose challenges for companies in areas such as data protection and there are ongoing issues such as cybersecurity. But the advantages of investing now in new solutions and technology and expanding beyond Europe should help companies navigate those counter-currents and challenges.
“We’ve invested a great deal in technology and we’re really starting to see that pay off now. For any business, keeping up with the latest technology is imperative to survival, but investing in technology further to innovate can help a company to scale. Without knowing how Brexit is going to land, having a business that can efficiently scale across Europe is going to be very important and technology will be at the core of that for most businesses,” writes Seedrs’ Lynn.
He expects further developments in cybersecurity, given increased legislation around data protection and high-profile legal cases involving some of the tech giants – a view that chimes with Davis' message.
“Technology, cybersecurity, data analytics, blockchain – they are not subject to the vagaries of politics. Life there is moving so rapidly, you need to be part and parcel of its evolution and development.” Davis says.
This article first appeared on FT.com.