Businesses will expand their security staff as budgets improve, reviving industry demand.
Los Angeles, CA (PRWEB) September 30, 2013
Since the mid-1990s, demand for the Security Services industry has grown as a result of 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. Revenue has therefore remained relatively flat during the five years to 2013, decreasing annually.
According to IBISWorld Industry Analyst Andrew Krabeepetcharat, “The recession also forced some client offices to close, causing industry demand to decline.” Some companies eliminated security altogether, while others ceased security outsourcing and brought this task in-house. Furthermore, many clients reduced the number of guards working a shift and/or the number of hours that they patrolled each day. These factors caused industry revenue to decline in 2008 and 2009. As demand plummeted, unprofitable operators left the industry while larger, successful operators acquired these ineffective industry operations. As a result, “the number of industry enterprises is expected to decline over the five years to 2013,” says Krabeepetcharat.
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. Increasingly, however, these labor-intensive activities are being substituted by monitoring technology and equipment, such as closed circuit TV (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.
IBISWorld estimates that the four largest players in this industry, which include Securitas Security Services USA, G4S PLC and AlliedBarton Security Services, account for more than 20.0% of market share in 2013, indicating a low level of concentration (see IBISWorld report 56161 for major player market shares). Among firms with employees, more than half the number of enterprises has fewer than five employees. Industry concentration declines even further when self-employed individuals are taken into account. The Security Services industry also has a lot of medium- and large-size firms, which typically offer integrated security, value-added services and cash handling. During the next five years, the overall level of concentration is not expected to change significantly. In 2018, businesses will increase their security budgets as sentiment improves and more funds become available. Many clients will also increase their security staff and the hours that need to be patrolled. The rise in demand is projected to boost revenue by this year 2018, including a moderate increase in 2013. Still, external competition from alarm companies will remain a pressing issue and weigh heavily on industry profit.
For more information, visit IBISWorld’s Security 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
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 Security Services 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
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.