Businesses will expand their security staff as sentiment improves, reviving industry demand
Los Angeles, CA (PRWEB) August 15, 2012
Since the mid-1990s, demand for the Security Services industry has grown due to corporate and government clients increasingly outsourcing industry services. The industry relies largely on security outsourcing by retail centers, banks and other businesses. In recent years, however, the industry has had to battle greater competition from security technology and shrinking security budgets due to the recession. “Consequently,” says IBISWorld industry analyst Andrew Krabeepetcharat, “revenue has remained relatively flat during the five years to 2012, decreasing an estimated 0.2% annually on average to $28.2 billion.”
The recession also forced some offices to close, causing industry demand to decline. Some companies eliminated security altogether, while others ceased security outsourcing and brought the task in-house. Also, many clients reduced the number of guards working in a shift or the number of hours that are patrolled each day. “Other firms took advantage of the temporary decline and expanded their operations by acquiring smaller players,” says Krabeepetcharat. As a result, the number of industry enterprises is expected to decline 0.6% annually on average to 40,874 over the five years to 2012. These factors caused industry revenue to decline in 2008 and 2009; however, increased consumer spending and corporate profit has started to reverse the trend. Consequently, revenue is anticipated to grow 2.9% in 2012. The Security Services industry’s three largest firms, Securitas AB, G4S PLC and Allied Security LLC, account for about a third of industry revenue.
Security firms offer a variety of services, including security with guards, armored transportation and private investigation. Accounting for about three-quarters of industry revenue, security guards are the industry's most widely used service. However, these labor-intensive activities are being substituted by monitoring technology and equipment, such as closed-circuit television (CCTV) systems, which are provided by the Security Alarm Services industry (IBISWorld report 56162). Coupled with the decline in demand during the recession, rising competition has caused profit margins to fall. In response, larger industry players are offering more value-added services to mitigate profit declines. During the five years to 2017, businesses will increase their security budgets as sentiment improves and more funds become available. Many clients will increase their security staff and the hours that need to be patrolled. The rise in demand is projected to boost revenue in the coming years. Nevertheless, external competition from alarm companies will remain an issue and weigh on industry profit. For more information, visit IBISWorld’s Security Services in the US industry report page.
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IBISWorld industry Report Key Topics
Security service companies provide one or more of the following: investigation and detective services; guard and patrol services; and protected transport of valuables, including money, receipts and other items. The industry does not include companies that sell security systems, such as burglar and fire alarms.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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