By Max Clarke

Half of business services companies have reduced staff numbers by more than 10% since the start of the last recession, though the worst is now over as businesses are slowly looking to increase headcount once more.

Cambridge Online, a leading IT systems and services provider, has published results from its first annual East of England Regional Business Survey to examine how business services companies from the nine counties across the region managed during the downturn, their business plans for growth and investment, plus how they use IT within their business.

The business services companies which were surveyed included IT suppliers, shop fitters, business consultants, printers and recruitment agencies. Nearly a third reported sales fell by more than 25% during their financial year 2009/10 compared to an average of 18% across all business sectors during the height of the recession.

Around half of business services companies reduced staff numbers by more than 10%, nearly double the regional average of 29%. In addition, nearly twice as many business services companies sold off or closed less profitable parts of their business compared to the average. Given their time again, 42% of business services companies regret not innovating earlier in the recession to create new income streams.

“Business services companies were hit hard and fast early on in the recession as businesses quickly cut their spending,” commented Ray Olds, chief executive officer, Cambridge Online.

More positively, the worst appears to be over for business services companies, as only 5% reported plans for new staff cuts, and only one in 10 were looking to introduce new pay freezes. Two thirds of business services companies believe the East of England is ideal for accessing skilled employees needed to grow their businesses. Opinion was split about the replacement for the East of England Development Agency (EEDA), 43% disagreed that the new local enterprise partnerships (LEPs) would be more effective than EEDA.

Although recognising that the Eastern region was good for securing skilled staff, business services companies now ranked finding people with the right skills as a significant factor holding back business growth, with the health of the wider economy and increased price sensitivity ranking highest. Nearly one in four business services companies see acquisition or partnership as an opportunity to grow, compared to an average of 16% overall.

“These businesses needed to innovate quickly to find new revenue streams and bring on new customers to stem the loss of their regular business,” continued Olds. “Business services companies are now turning the corner and gearing up for growth — using IT more effectively, getting the most of CRM to exploit every sales opportunity and exploring the benefits of social media are priorities for these businesses.”

Getting new customers is the top priority for 52% business services companies — by far the most important factor. 43% of those surveyed use a customer relationship management (CRM) system, stating that maximising sales opportunities is the main reason to invest in CRM.

Developing social media is the IT development of the greatest interest to business services companies, ranked much higher than the average for the region. IT budgets for business services companies are increasing for one in four of business, compared to 35% for the region overall.

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