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New research on security guarding industry published by Apex Insight suggests that the industry will consolidate as growth is driven by large government outsourcing contracts.
The outsourced security guarding services market in the UK is approaching £5 billion in size, having grown in recent years despite the recession. A few areas, such as retail, airports and government contracts, have driven this growth. This follows from the emphasis on airport security after 9-11 and outsourcing of contracts for public sector services such as operation of prisons and border control.
The market researchers note that the increased spending on security has not been driven by actual crime, which has fallen steadily over the last couple of decades. However, public perception and fear of crime have not fallen. Demands for tougher sentences are widespread and prison populations have increased with the UK incarcerating a higher percentage of its population than most other European countries.
Deployment of new security technology, such as CCTV, has been both as a complement to and a substitute for, human guards. In some cases it has enabled customers to reduce the amount they spend on security.
Another recent trend has been convergence between security and facilities management. Several of the leading players in the industry, such as G4S, MITIE, Compass, Serco and Sodexo, provide security as part of a broader range of services. For FM companies the logic is compelling: incremental revenues from cross-selling of security can increase revenue per customer and hence drive profitability. Benefits for customers are debated: while integration of local management at smaller sites is often reported as a saving, there are few reports of significant operational reengineering to remove costs by integrating security and other services on the ground. Also, any savings need to be weighed against potential risks from using a non-specialist in what can be a sensitive area.
Some guarding providers, such as Securitas, Corps and Shield, continue to focus exclusively on security as a stand-alone service and evidence is that many of the companies offering a range of services tend to have separate security contracts – other than for the UK public sector where procurement approaches such as PFI have encouraged the trend towards bundling.
While the core manned security market is somewhat mature, growth is likely to come from increased outsourcing of government services such as the operation of prisons and provision of a range of policing services. In addition, airports are likely to remain a key source of growth. Economic recovery is likely to accelerate passenger growth and new technologies, such as body scanners, are constantly being developed and deployed.
The market remains relatively fragmented. Some 17 of the largest UK security service providers account for 75 per cent of the market. We note that margins have held up very well for most of these operators with price increases being achieved despite the economic downturn and wage inflation being kept in check. The remainder of the market is served by a long tail of smaller providers with the industry accreditation body, the SIA, having over 700 approved contractors. The nature of growth, with the most attractive opportunities appearing to be in areas where there are large contracts, implies further market consolidation.
The full market report: “Outsourced Security Guarding Services: UK market profile and forecasts” is available from www.apex-insight.com/research