Decoding the Global Security Services Market: 4 Areas to Watch Through 2024

The $220 billion global security services market is expected to expand at a healthy 3.6% annual rate through 2024, despite near-term losses resulting from pandemic-induced recession. Though specific factors driving growth vary by market (i.e., guard services, alarm monitoring, cash-in-transit, systems integration), they do share some distinct commonalities, and the best opportunities exist where there is:

• solid economic expansion and strong growth in urban building construction
• widening income inequality that leads to instability and crime and an expanding middle and upper class that can pay for supplemental services
• increasing real and perceived threat from terrorism and armed militants
• rising public concern for the effectiveness of public safety officials and corresponding improvements in consumer trust of private service providers
• increasing penetration of value-added and technology-related services

Below are four areas to watch in the global security services market through 2024.

1. COVID-19 Pandemic Brings Many Near-Term Challenges, But Also Some Long-Term Opportunities

While the security industry is traditionally viewed as resilient to recessions – primarily due to the perceived association between recessions and crime risk – the downturn produced by the pandemic included some distinctive unfavorable conditions:

• The complete cessation of large public gatherings – such as concerts, conferences, and sporting events – negatively impacted demand for guard services.
• Installation and maintenance of security systems was largely treated as a “nonessential” activity, and providers of systems integration services were generally unable to perform their functions as offices, warehouses, and other commercial facilities closed down.

However, shutdowns of “nonessential” business did have some positive effects for security service providers. For example, additional services are needed where stay-at-home orders curtailed the presence of workers and the general public, who would otherwise provide a natural deterrence against property crime.

2. Asia/Pacific, Led by China & India, Continues to Drive Global Revenue Growth

In terms of regional trends, the strongest growth prospects for security service providers are in the Asia/Pacific region, with China and India projected to account for a combined 41% of global gains in security service revenues between 2019 and 2024. Guard services will comprise the bulk of gains in both countries:

• Labor costs in India remain very low, bolstering the affordability of manned guarding relative to more technology-driven solutions.
• While labor costs in China are on the rise, there is a continued shift toward private services in lieu of government and quasi-state security providers.

The alarm monitoring market in both countries will also increase rapidly as more of the large stock of nonresidential buildings feature modern security technology.

In contrast, revenue growth in North America and Western Europe will be somewhat weaker, although these regions will continue to account for a large share of the global market. Nevertheless, strong penetration of complex technological security systems will offer some growth potential in high-income countries.

3. Rise of Integrated Digital Security Systems Blurs Line Between Physical & Cybersecurity

Cybercrime is on the rise amid the coronavirus pandemic, in large part because more business is being conducted online and employees are working remotely, which greatly increases the number of possible failure points in a security system. In addition to costing companies billions, these breaches can erode the public’s trust in them and result in lost business or even lawsuits.

Until recently, cybersecurity has been largely separate from the traditional security industry (falling more under the umbrella of the information technology industry), but growth in the use of integrated digital security systems has blurred the line between physical and cybersecurity. As a result, security service providers are increasingly gaining information technology competencies, and cybersecurity represents a core growth area for many security companies.

These trends have driven increased acquisition activity as leading security service providers seek to expand their expertise in emerging segments. Allied Universal in particular has made significant investments in this area, acquiring multiple security technology specialists in 2018 and 2019.

4. Smart Home Security Expanding Consumer Market for Security Services

The increasing prevalence of internet-integrated consumer electronics equipment has significantly reduced barriers to entry for the purchase of residential security services, global revenues for which are forecast to top $35 billion in 2024. In contrast to the commercial and government markets, high-income countries like the US will account for the largest share of gains due to the higher penetration of household equipment offering electronic monitoring abilities:

• To an extent, the increasing capabilities of self-monitoring systems integrated with smartphones or tablet computers will provide intensifying competition for outside alarm monitoring providers.
• However, purchase of home monitoring equipment will offer a gateway to later purchase of professional alarm monitoring services, especially as users realize the value of outside monitoring providers in providing security during vacations and other busy periods.

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About the Author:

Peter Kusnic is a Content Writer with The Freedonia Group, where he researches and writes studies focused on an array of industries.