Los Angeles, CA (PRWEB) February 28, 2013
In the five years to 2013, IBISWorld estimates that revenue for the Background Check Services industry will decrease at an average rate of 0.2% per year to $3.7 billion. The decline is largely the result poor performance during the recession, with revenue falling 7.6% and 2.6% in 2009 and 2010, respectively. According to IBISWorld industry analyst Kevin Culbert, “Rising unemployment reduced the need for businesses to screen for job candidates while an increase in rental vacancy rates diminished demand from apartment leasing companies.” Luckily for industry operators, slow improvement in the labor market and a decline in rental vacancy rates have since boosted demand for background check services. As a result, IBISWorld estimates that industry revenue will increase 3.3% in 2013.
Over the past decade, the internet has been the primary driver for the industry's growth. “Traditionally, background check services were largely manual,” says Culbert. However, the internet has streamlined and automated many of the processes performed by hand. This factor caused a significant number of firms to enter the industry during the past decade. However, this market saturation, coupled with the fall in demand from the recession, caused industry profit to decline, prompting a period of consolidation within the industry. IBISWorld estimates that the number of firms operating in the industry will decline at an annualized rate of 0.1% to 3,635 in the five years to 2013.
In 2013, the four largest firms are expected to account for about 10.0% of the Background Check Services industry's revenue, indicating a low level of market share concentration. Historically, industry operators required considerable expertise to conduct investigations and detailed background checks. However, the growth of online technology over the past decade has provided an opportunity for firms to enter this industry. According to the National Association of Professional Background Screeners, most industry operators are small firms focused on aggregating public records. Less than 2.0% of industry firms are large background screening providers that operate at a national or international level. Over the past five years, market share concentration has marginally increased due to some consolidation among leading industry firms. For instance, Sterling Infosystems' 2011 acquisition of Axciom's background screening business doubled the market share of one of the larger firms in this industry.
IBISWorld expects that industry revenue will increase in the five years to 2018. During that time, industry operators will benefit from slow but steady improvement in the labor market. Businesses will turn to industry operators as they hire more employees. This factor will be bolstered by an increasing number of cities and counties that have enacted laws banning companies from asking applicants whether or not they have been convicted of a crime. However, strong growth will be mitigated by an increase in vacancy rates, which will diminish demand from apartment leasing companies.
For more information, visit IBISWorld’s Background Check Services in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
Firms in this industry offer tenant and employment background screening to consumers, landlords, corporations and other organizations.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.