Robert H. Perry, founder and CEO of Robert H. Perry & Associates, Incorporated, is dedicated to making information about industry trends available so security organizations can make better decisions. His 2019 U.S. Contract Security Industry white paper is a great place to learn about current industry statistics. Today we will break down the important parts of the 11th edition of his white paper and what it means for you as a security professional.
If you would like to learn more about these topics, the Silvertrac team hosted Mr. Perry for a Thinkcurity webinar. Click here to watch it now!
Major Players of the Contract Security Industry
The five largest security companies in the world have at least $1 billion in revenues from manned guard services globally. Four of them get a large amount of this revenue in the U.S. Because of their massive size, these companies are the leaders in the industry - establishing new normals and trends in the services they provide and even broader strategic decisions. Here is the list of the five largest private security companies in the United States, in order from largest to smallest annual revenue:
- Securitas ($11.6 billion)
- G4S ($9.8 billion)
- Allied Universal Security Services ($7.4 billion)
- Prosegur ($4.6 billion)
- GardaWorld ($2.3 billion)
How Much Do These Companies Actually Make?
Based on 2018 numbers, these five companies made an estimated $35.7 billion globally, with $15.6 billion coming from the U.S. To put these numbers in perspective, the entire security industry was estimated at $27 billion in the U.S. last year. This means that these companies were responsible for over half of the entire industry’s revenue.
In 2018, the U.S. security industry was estimated to grow by roughly 6%. While this might seem like good news for everyone, almost all of this growth is enjoyed by companies like Securitas and Allied Universal. Small security firms will still benefit, but there isn’t as much opportunity as the numbers might make you think.
Where Do They Spend All That Money?
We’ve established that these companies lead the way in terms of revenue, now let’s take a look at their strategic decisions.
Securitas spent $103 million in acquisitions in 2018 alone. $70 million of that was for security technology. Allied Universal spent $1 billion in acquisitions last year. In 2019, they made a $73 million acquisition of the technology platform Securadyne. This article in Security Magazine quotes Steve Jones, the CEO of Allied Universal, saying “our new acquisition of Securadyne Systems supports our long-term strategy to become the leader in the security technology market.”
Why does this matter? The five biggest companies in the manned guard service industry - who already take home a majority of the money - are getting even bigger. They are acquiring smaller guard firms faster and faster. Not only are they growing rapidly, but their service offerings are more appealing as they continue to innovate with new physical security technology.
Legislation Means Higher Costs
Most legislation has some kind of impact in the private sector. Sometimes it’s helpful, but many times it can cause headaches for business owners, making it hard to go home with a profit. These three pieces of legislation are important to keep in mind for anyone forming a security business plan in the next few years.
The basic idea behind predictive scheduling laws is that employers are required to schedule their employees a certain number of days in advance. In many areas, these laws only affect the retail and hospitality industries. But in Chicago, these laws will also be applied to the building services industry, which includes security guard services. This legislation makes much-needed on-call and “just-in-time” scheduling very difficult for security companies who use flexible guard scheduling policies.
Widened Overtime Threshold
In September, the Labor Department put into place new overtime laws. These laws increase the number of workers eligible for overtime rates, with about 1.3 million workers now eligible for these rates. In states like California, where overtime laws heavily impact security companies' bottom line, this law will definitely increase labor costs. However, many companies are choosing to invest in guard scheduling systems that enable them to run their business with fewer people without risking efficiency.
Minimum Wage Increases
There has been a big push in recent years for minimum wage increases across the entire country. This website gives a great breakdown of current and planned minimum wage changes by state. Like the overtime threshold, increases in security guard minimum wages means increased labor costs to business owners. This can be especially hard for smaller companies.
The big five security companies are closing in on smaller players in the industry. New legislation can mean higher costs, more paperwork, and smaller profits for small business owners. These conditions can seem overwhelming, but we are here to help. Robert Perry & his team have been helping security guard firms of all sizes navigate the trends of the manned guard services industry for decades.
To learn more from Robert Perry, check out the State of Physical Security Industry Thinkcurity webinar now!