Global Contract Security Services Demand to Reach $137 Billion in 2008

7.7 percent annual growth expected in contractual security market


The world market for private contractual security services is projected to expand 7.7 percent annually through 2008 to US$137 billion. Heightened fears of global terrorism, in tandem with rising conventional crime rates in many countries, will be important growth factors. While a weak global economy following the September 2001 attacks on the US has not allowed all of the anticipated spending on homeland security to occur and/or persist in developed countries, a strong economic expansion should now allow pent-up demand to be worked off, as tourism and air travel rebound, consumer confidence recovers and corporations, governments and institutions find themselves under less pressure when it comes to security budgeting.

The fastest growth is expected in the world's developing regions -- Asia, Latin America, Eastern Europe, Africa and the Middle East. These areas feature largely unpenetrated private security markets and are characterized by rising crime rates, novel security threats, expanding economies, new business formation activity, heightened foreign investment, emerging middle and upper classes, and privatization of formerly state-owned industries like banking and air travel. As such, they will increasingly possess both the need for and the means to invest in supplemental security measures. Although China will post the fastest growth in demand for security services through 2008, it will still comprise less than one percent of overall global spending.

Contract guarding will remain the largest segment of the market, accounting for over 40 percent of total revenues. Demand will benefit from the trend toward outsourcing public and proprietary (i.e., in-house) guard operations, although growth will be hindered by competition from increasingly affordable electronic security equipment like CCTV and access controls. In North America and Europe, opportunities will be limited in the mature armored transport segment. However, diversification into less traditional cash handling markets like ATM servicing, as well as further penetration of the retail sector, will provide opportunities in both developed and emerging economies. The private prison management industry has also suffered a dramatic reversal of fortunes since the late 1990s, as rising opposition to the privatization of correctional facilities has taken it from the fastest to one of the slowest growing security service segments.