Revenues for private contract security services to rise, study finds

Dec. 18, 2014
Demand for guard services expected to outpace electronic security in less developed nations

According to a study recently published by The Freedonia Group, global revenues for private contract security services are expected to increase by nearly 7 percent per year to $267 billion in 2018. The research firm said that the forecasted increase will be driven by continued growth of security service markets in a number of developing countries such as Brazil, China, India and Mexico. Additionally, demand for security services is also expected to be bolstered by an improved economic environment, as well as growing building construction activity in developed nations. Contract guarding accounted for more than half of global revenues generated in 2013 and is expected to see the fastest gains through 2018.

“Globally, the improved economic environment and growing building construction will support demand.  In addition, rising incomes and increasing levels of urbanization will support demand,” said David Petina, industry analyst for The Freedonia Group. “In a number of markets, improved regulations coupled with better enforcement of existing regulations will also drive demand by requiring greater training of guards and limiting the use of low price, unregulated security service vendors. More generally, concerns about crime, terrorism, and insufficient public safety measures will support demand for supplemental security services. Many of these same factors will support demand in the U.S., particularly the improved economic outlook.  In addition, rising penetration of alarm systems, monitored video surveillance systems, and PERS alarms will boost demand.”  

The research firm expects the fastest gains to occur in developing parts of Asia, Central and South America, Africa, and the Middle East. Brazil, which was the world’s second largest national market behind the U.S. in 2013, is also expected to continue to see rapid gains through 2018, approaching 11 percent annually. China, India, Mexico, and South Africa are also expected to achieve double-digit annual growth through the forecast period, although from smaller bases.

Because guard services are among the first outsourced services used, Petina said they tend to outpace demand for electronic security in less developed markets. And while demand may not be quite as strong for guard services in North America, they are still expected to post strong gains in the market.

“A number of these developing markets are expected to see rapid growth over the forecast period, which will boost demand for guard services,” added Petina. “In North America, alarm monitoring and other electronic services will outpace gains in guard services.  However, the guard market will also see solid growth, primarily due to the ongoing economic recovery in Canada and the U.S. and strong growth in the Mexican guard market.”

In terms of electronic security services, Petina said that their study primarily examined alarm monitoring, with some discussion of alarm and video systems integration.

“Both of these will see strong growth going forward, supported by the rebound in building construction activity and the integration of alarm and access control products with video surveillance systems,” said Petina. “In addition, in a number of developing markets, the prevalence of monitored alarms (as opposed to local alarms or direct-dial systems) is expected to increase, which will support demand
for related monitoring services.

For more information about the “World Security Services” study, visit www.freedoniagroup.com.