Security has become the buzz word in today’s world, be it for the governments, businesses, citizens or general environment. There are multiple factors, often inter-twined, which contribute to this phenomenon. World over the dynamics of governance, of doing business, and of the politico-economic-socio-religious set up is seeing a churn like never before. The world has moved from being a comity of individual nations, to being a “global village” to being islands of inward looking nationhood and segregated beliefs, a la BREXIT, Catalonia, et al.
World over, the security paradigm has been changing and constantly evolving with newer and more sophisticated threat perceptions, new vectors and more complex risk scenarios. India has its own set of peculiarities in this regard. Per se, the country is on a cusp of unprecedented and sustained growth trajectory; business activity is not only picking up, but continuously evolving, diversifying and integrating across verticals.
The Indian Landscape.
Government of India has just about set the stage right for a strong, sustained upward move of economy in the short to middle term; and with it, the entire domestic business activity is expected to see an upward swing. Add to this, the evolving threat dynamics and the growing ‘felt need’ for assurance of a safe, secure environment among individual businesses and the society at large; the security industry has a crucial contribution to make. Not just will it have to gear up to the high demand, but also stay ahead on the curve. Growth in security industry will not only have to be balanced, well-managed and inclusive, but also responsive to the evolution dynamics. It would be expected to shift from being largely unorganized and ad-hoc, to a more professional, well regulated and compliance oriented. Industry reforms have begun, but a lot more distance needs to be covered.
In the recent years, specifically the last decade, numerous studies and sample-based research work have been undertaken on the security industry in India to gauge the size, spread, diversity and dynamics; to evaluate the potential it holds for stakeholders, especially the private security players; and the likely challenges in the years ahead.
“The private security industry has assumed an important role in recent years. It was the opportunity and nature of the private security industry which enabled employment to a hitherto large section of the populace, which, if not employed in this industry, may have remained outside the fold of formal employment. It is in this sense that contribution of the private security industry to employment generation in India is unique. The industry presently provides employment to nearly 7 million people. With the growth of urbanisation in the country and the changes in the perception of security by governments, business houses and citizens, this industry is poised to register a substantial CAGR in the near future. Particularly important is the Government’s focus on development of Smart Cities in the country and the need of more security personnel”.
A. Didar Singh, Secretary General, FICCI
A FICCI–Grant Thornton report of 2014 substantiates the above conviction of the industry experts. For example, the private security industry in India, which started in 1960s with a handful of players and hardly any investment worth a mention, is today a Rs. 40,000 crore+ industry, with just about 35% market share for the organized sector, and a whopping 65% still in the unorganized format.
The industry’s most notable growth has been in the past decade, with a CAGR of 23 to 25 %; some more aggressive estimates suggest a YoY growth rate of 40 % in more recent years. Approximately 15000 companies/security agencies are operating across the length and breadth of the country. As compared to a demand for roughly 8 mn strong police force, only 3.2 million police personnel are in service, with over 5 mn (and growing) gap left for private security service providers to fill. Add to this the perceived changes and qualitative shift in the modern day security needs for the government, businesses and society – the future is indeed bright, and the bottom of the jar probably fathomless.
Peculiarities that Make Indian Landscape Ideal for Business Opportunity & Growth
1. Internal Security Situation and Business Continuity Imperatives. India has been a victim of some or the other form of internal disturbance ever since its Independence. In the recent years, naxalism, religious intolerance and social activism have added a new dimension to the internal security environment. Add to it the virtual dimension, the cybercrime and online frauds, and completely new security paradigm is under evolution.
2. Qualitative Shift. In India, the bulk segment of security services industry is ‘Manned Guarding’, with nearly 75% share, with Cash Services and Electronic Security Services making up for most of the rest. So long as India has a vast surplus of employable/upskill-able manpower supply, the growing demand for manned guarding will always find a matching supply as well. However, the qualitative benchmark for manned guarding is constantly getting raised – the need has changed from a simple, static security watchman to a multi-function, multi-talented, skilled security professional, who can not only co-opt security technology tools, but also undertake investigations and audits. This is where the gap in demand and supply is fast widening – while the client expectations get constantly tweaked upwards, the available supply side surplus continues to languish qualitatively. There are various constraining factors on one hand, and competitive, wafer thin operating margins on the other.
3. Regulatory Reforms. The need is for a holistic and reformative regulatory intervention, stricter compliance norms and phased implementation thereof, to not only cover wide range of security services under a common minimum protocol, but also deter qualitative compromise caused by competitive undercutting between the organized (compliant) and unorganized (non-compliant) players. Once done, expect a steady, sustained, long term growth in the domestic security industry.
4. Entrepreneurial Push. Corruption and bureaucratic hurdles often encountered by smaller, lesser influential entities in obtaining government licences, certifications, etc. are factors which have largely served as deterrence to several skilled security professionals from turning into entrepreneurs. There is a vast pool of untapped talent at entrepreneurial and managerial levels for driving growth and penetration in the security industry, but it largely prefers to remain aloof – often discouraged by the bureaucratic and ethical hurdles. A reformatory and reconciliatory approach should provide the right stimulus.
5. Structural & Macro Economic Reforms. Given India’s overall economic growth potential and the vast, untapped market, security service industry is expected to be among the biggest beneficiaries of the government’s ongoing structural and macro-economic reforms. Ease of doing business is the present day government’s stated priority and an important area of focus. It should eventually enable a steady rise in entrepreneurism and all-round stimulus to business activity. Since security tends to touch practically every form of business activity, especially in its growth stage, the unstated is obvious.
The Way Ahead
In recent years, ‘Security and Loss Prevention’ has evolved as an integrated function. It not only caters to the standard physical and information security requirements, but also provides for safety & security audits and a bunch of business continuity essentials. The provider of security solutions also offers to undertake aforesaid audit checks, and provides end-to-end crisis detection & response mechanism. The potential for growth of this integrated function in Indian context is vast; having already caught the imagination of a niche few industry leaders.
Forensic investigations, cybercrime detection and mitigation, Intelligence and counter-intelligence, integrated information security and analytics are some of the sunrise segments in security industry. Several new players have mushroomed in these niche fields to provide smart security solutions, and create force multipliers or game changers for their clients. However, these are largely unorganized and unregulated islands of excellence. In a relatively infant stage, these promise to offer a huge investment and research opportunity; these are also tipped to become formidable segments of security industry going forward.
Given the gnawing gap in desired and available government resources for internal security and law enforcement needs, there is a scope for large-sized, established, pan-India private security companies to share greater responsibility. The government has not yet opened up the strategic and high-sensitivity security sector for private participation, but the day is not far before that happens. It is already prevalent in several developed countries; and with the growing control and accountability mechanisms, India too should be arriving there soon.