A slow but steady increase in hiring will support demand over the next five years.
New York, NY (PRWEB) May 02, 2014
The Background Check Services industry has stagnated over the past five years. The industry performed poorly during the recession, with revenue falling 2.7% and 4.1% in 2009 and 2010, respectively. “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,” according to IBISWorld Industry Analyst David Yang. Additionally, according to the Society for Human Resources Management, the percentage of businesses that conduct credit and criminal background checks have slightly decreased from 2010 to 2012, limiting demand growth for industry operators. Luckily for industry operators, slow improvements in the labor market and a decline in rental vacancy rates have since boosted demand for background check services. As a result, IBISWorld anticipates revenue to rise 3.5% in 2014. Overall, however, the industry is only anticipated to marginally expand at an average annual rate of 0.1% to $1.6 billion in the five years to 2014.
Over the past decade, the internet has been the primary driver for the industry's growth. Traditionally, background check services were largely manual. However, the internet has streamlined and automated many of the processes performed by hand. “The growth of online services allowed firms to more easily enter this industry, causing internal competition to intensify,” says Yang. High levels of internal competition, coupled with the fall in demand from the recession, caused industry profit to decline in 2009. While margins have recovered since then, stagnant growth and internal competition have nonetheless prompted a period of consolidation within the industry. In the five years to 2014, the number of enterprises is anticipated to fall at an average annual rate of 1.8% to 3,149.
IBISWorld estimates that industry revenue will increase at an average rate of 3.5% per year to $1.8 billion in the five years to 2019. During that time, industry operators will benefit from a slow but steady improvement in the labor market. Also, 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.
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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
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