The outsourced security guarding services market in the UK is approaching £5bn in size, having grown in recent years despite the recession. A few key areas, such as retail, airports and government contracts, have driven this growth. This follows from the increased emphasis on airport security in the post-9/11 world and outsourcing of contracts for public sector services such as operation of prisons and border control
Interestingly, the increased spending on security has not been driven by actual levels of crime, which have fallen steadily over the last couple of decades, however, public perception and fear of crime have not fallen.
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, the report authors Apex Index say, debatable. Apex notes: ‘while integration of local management at smaller sites is frequently reported as a saving, there are few reports of significant operational reengineering to remove costs by integrating security and other services on the ground. Furthermore, any savings need to be weighed against potential risks from using a non-specialist in what can be a sensitive area.’
Some leading providers, such as Securitas, Corps and Shield, continue to focus exclusively on security as a standalone 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.
The report suggests that 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. In Apex Index’s research the performance of 17 of the largest UK security service providers, which account for 75% of the market is analysed. The researchers 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 members. The nature of growth, with the most attractive opportunities appearing to be in areas where there are large contracts, implies further market consolidation in the future.