As police forces struggle, can private security industry seize the moment?

Despite all the industry buzz about artificial intelligence and robots replacing traditional security guards, the threat environment and uptick in violence in many U.S. cities suggest otherwise.

Statistics, studies, and interviews conducted by SecurityInfoWatch, suggest private security forces will be more needed than ever as public police departments struggle with recruitment, retirements, high costs for wages and equipment and anti-police sentiment.

There is clearly an increased environment of unrest in the U.S., whether it’s retail theft, organized criminal enterprises, active shooter incidents and even political extremism, says Steve Amitay, executive director of the National Association of Security Companies (NASCO).

“Who would have thought 10 years ago that you’d have to hire a security guard on election day at polling places, or at a school board meeting?” Amitay says. “You’re also seeing a sea change in the attitude of the general public in terms of whether they feel safe or not.” 

The private market growing faster

According to a 2021 study by the market report service Statista, there were 675,734 public police officers in the U.S. in 2004, and when 2019 concluded there were little less than 700,000. With an estimated 830,000 outsourced security guards in the U.S., that puts the ratio at 1.2 outsourced guards to every public police officer. 

The report also shows a compound growth rate in the public police force at only 0.24% from the years 2004 to 2019, which is much lower than the growth rate for outsourced security guards.

A white paper on the U.S. contract security market published in 2022 by Robert H. Perry & Associates says the market for companies providing their security in-house remains at approximately $15 billion based on what they would have to pay at out-sourced security rates. The firm indicates that 60-75% of this market may be favorable for converting from in-house to outsourced security.

Large reporting agencies such as Freedonia, IBIS World and Hallcrest have reported growth in the contract security industry in the 4-5% range for the 10-year period leading up to 2019. For the most recent reporting period, revenue growth for private contract security was 7%, coming primarily from increased billing rates from present customers to offset, or partially offset, the increase in security officer compensation.

Perry estimates the North American private contract security market at $34 billion -- with approximately $30 billion coming from the U.S. that is distributed across 8,000 companies.

A survey of privately held contract security companies last year revealed expected revenue growth of about 10% for the coming period, with larger companies reporting growth in the 20-30% range. This came primarily from billing rate increases, “but a significant amount coming from existing customers requiring more security, in-house security converting to contract, and winning accounts away from their larger competitors,” Perry’s report said.

Smaller companies have de-emphasized technology offerings because their account bases aren’t demanding it, but larger companies are beefing up their tech offerings through buying or building command centers or through partnerships with existing monitoring systems or systems integration companies.

Also, there’s an estimated $15 billion of potential revenue from companies presently providing their security function through in-house security personnel.

These companies are starting to explore taking their security functions to the outsourced contract market, especially to the larger security companies that offer stationary security officers in conjunction with integrated guarding and artificial intelligence.

Perry’s report predicts the companies will see growth in revenue coming from more increases in billing rates, advanced technology enticing customers to increase their security spend, and new and expanding markets – such as off-duty policemen, closed communities and K-9 offerings. 

Challenges Endure for Guards

Private security companies are facing their own ‘perfect storm,’ Amitay says, as the labor market is tight. One of the major obstacles, he says, is licensing requirements of various states.

At least 30 states require some type of license or registration for security officers to work. “It’s almost unprecedented in the hourly wage industry that in order to start working you first have to pass a background check, training, submit an application and be processed and approved by a state,” he says.

Amitay is working with lawmakers in several states in hopes of revamping regulations to speed up the licensing process for guards. In Illinois, to onboard a new private security officer a firearms control card must be obtained and that can take up to 18 weeks – and guards who switch companies must reapply for a license again, he says.

In Oklahoma and Connecticut, legislation has been passed allowing security guards who’ve applied for a license, been trained and passed background checks to start working for a specific period of time while waiting for licensing to process.

Companies are also investing a lot of resources into recruiting and hiring bonuses, as retention is incredibly important in such a high-turnover industry, Amitay notes.

Liability is another big elephant in the room. Many private security officers will not initiate contact with a suspect unless someone’s life is in immediate danger.

Amitay says businesses, hospitals and other entities are beefing up private security with a human presence. Private security officers are often instructed to not engage with attempted theft for fear the situation could escalate – unless the suspect is endangering life or threatening to harm someone.

“But if you have a uniformed security officer present at the store or whatever facility,” it can serve as a deterrent and a suspect may choose another location.

Amitay wants to explore an effort to expand so-called “good Samaritan” laws to security officers that limit immunity for PSOs trying to provide aid in a life-saving situation, even if the outcome is not favorable.

Nathan says about 40% of his guards in Texas are armed and he encourages all of his employees to be licensed for that, even if they’re typically not armed. “It's a retention plan. It’s something else that people like to see, an additional level of training. It's a value add for the customer and for the guard,” he says.

Some states are also requiring or discussing rules to require armed guards to undergo a psychological evaluation, after complaints that security officers are stealing items. Nathan says he personally supports those requirements.

"We don't really have internal affairs divisions at most security companies. We're not investigators,” Nathan says. “We need to make sure that we’re not bringing more criminals onto to their property.”

One might think private security companies who have invested in manned presence might be skeptical or concerned about the efficiency gains from new technology, but Amitay says private security companies are embracing it to manage staffing levels and increase the value proposition to potential or current clients.

The analytic powers of artificial intelligence, such as Allied Universial’s Helius tool, can help managers decide where and when a certain number of officers are needed. That could mean human officers doing rounds at certain hours instead of each hour by utilizing customized risk assessments for specific locations, he says. Humanoid security is another option, but Amitay notes a person must still be monitoring the unit remotely and humanoids might not be ideal for public interactions.

“We’re not seeing anything to indicate there will be significant reduction in the use of security officers,” Amitay says. “Companies want to offer ideal solutions to customers, including cameras or other technology.” 

Market ‘Majors’ Say They’re Ready

Four world leaders – Allied Universal, GardaWorld, Securitas and Prosegur -- have over $1 billion in worldwide revenue and have operations globally. This includes two historic acquisitions: Allied Universal bought G4S in 2021, creating the largest security company in the world with revenues of approximately $20 billion. Securitas made it largest acquisition in history in 2022 when it paid $3.2 billion for the $1.8 billion revenue systems integration division of Stanley Black & Decker.

Major security companies interviewed believe they are ready to accept the challenge of augmenting security in various verticals.

The coordination and the working relationship between the private sector and law enforcement hasn’t dramatically changed for clients that are more sophisticated in their approach to managing risk, says Ty Richmond, President of Allied Universal.

“We've had clients that have leveraged law enforcement to augment our operations for many years. That's part of the risk-profiling process that most progressive major developers go through when they're evaluating vulnerabilities and exposures and the kind of dynamics, they need to have to deal with in their shopping centers and malls.

“But the dynamic that’s changed dramatically is that law enforcement is challenged with limited resources determining how they can distribute their workforce to manage the issues of their city, counties or states. That requires a very focused and concerted effort between the private sector and public law enforcement.”

Richmond says the company’s service portfolio has broadened beyond simply providing uniform, labor-oriented security to include technology such as remote monitoring, access control, video surveillance, intrusion detection systems and K9 services, as well as a risk advisory consulting business.

“Just through the natural evolution of our company, we’ve seen the need for more integrated services to help clients mitigate risk. And we have some customers who are obviously leaning on us more and more from a support and resource standpoint, just based on what might be happening in their local environments, which changes from city to city, county to county, state to state,” Richmond says. “And being one of the largest employers in the United States, it enables us to truly scale, optimize and leverage our resources very effectively where needed.”

Most states have license licensing requirements that dictate a lot of the prerequisites in the screening officers go through to become licensed.

Richmond says the company’s clients may have specific training relative to their environment and what their expectations are, Allied Universal itself has its own training curriculum focusing on standardization, compliance and quality control expected in areas such as risk mitigation, officers protecting themselves and customers, use of force management, and responding to a crisis, for example.

Richmond, who’s been in the industry for more than three decades, says licensing has evolved to a more structured and standardized process in most states. He believes the company’s security officers are prepared for the situations they face, with the key being discussions on the front end with clients about job requirements and the risk involved.

“Many of our customers are involved in helping us standardize certain post orders for jobs. The better we do on the front end, the more capable and accomplished we’ll be making sure we have training programs identified, approved by the customer and really standardized and managed and reported on accordingly,” Richmond says. “That's an absolute key and critical part of our engagement.” 

Critical Relationships

Since being founded in 1995 as a small operation based in Montreal, GardaWorld has evolved into a robust service business employing over 132,000 people globally. The company entered the U.S. market in 2019 after acquiring Whelan Security.

Steve Somers, Regional Vice President of Operations at GardaWorld, notes that many law enforcement officers have retired from or left their police organizations to help grow the security industry and establish trusting relationships with their former colleagues.

These relationships are critical to the industry, he says. “We expand on this by support and encourage our leadership team to become actively involved in public, private partnerships. They are key to developing and expanding the trust between the public and private sectors.”

GardaWorld has been providing security guards, mobile security, risk management, risk alerts, crowd management, video monitoring and virtual surveillance, investigation services, emergency medical support, turn-key mobile base camps, response logistics, specialized transportation, custody services, road flagging, executive protection and talent management.

He believes that over the last decade, law enforcement “has warmed to these critical relationships as they understand that in many cases the technology and management knowledge offered from the private sector is beneficial to fighting crime and better managing their resources.

“The last few years has been even more challenging based on the attitude towards law enforcement and the cutting of their budgets,” Somers says. “Traditional policing has changed during the last 2-3 years and many of these services have been augmented or privatized. In many cases we assist private communities, corporations and business improvement districts by partnering with them to secure their interests.”

Somers says GardaWorld has positioned itself to respond to the rigors of service demands and to meet varying state regulations. Compliance managers are tasked with monitoring the training compliance as well as all regulatory requirements “and that’s done weekly, monthly and quarterly to ensure we are following all contractual or regulatory requirements.”

The key to successful public-private partnerships, he says, is to share expertise, offer guidance and resources necessary to make informed decisions, increase visibility and understand the risks and liability associated with deployment, actions and inaction.

“First and foremost, we make sure we have a thorough understanding of the mission by developing a thorough plan of action and scope of work with our clients,” Somers says. “By doing that we reduce liability and mitigate risks associated with providing services. Our code of ethics and compliance environment also augment our efforts and ensure accountability.” 

Word from the front

Because they defend private interests, private security officers have restricted authority and focus primarily on crime prevention.

Each state regulates private security differently, and there are different rules concerning what weapons or techniques private guards can use to defend property and individuals. Each security company has very different training and recruitment policies leading to huge variation in the focus and quality of officers.

The threat environment that almost every business vertical is facing has greatly changed in the last five years, and the criminal justice system has also changed. In some cities, police response times for low-priority incidents can be hours or even a day or two.

Jonah Nathan, Vice President of Houston, Texas-based security company Ranger Guard, says the criminal justice system has also changed in the last several years, as the likelihood of getting stopped and charged for some minor offenses is much lower.

“We find that the criminal element doesn’t even want to be slowed at this point. They're operating almost like businesses, and ironically has been a big boost for security because now the deterrents are worth more than the punishment,” Nathan says. “The punishment’s not the deterrent anymore. If you have someone there that’s just going to interrupt them, they’ll say ‘Okay, we're going somewhere else.’”

Nathan observes the security industry almost tripled during COVID because of the number of different roles that security workers stepped into. While some of those needs have diminished with COVID-19’s dissipation, “people realize how more integrated your security can be into your team,” Nathan says.

“Your security can be your greeters at your door. That can be your security guard. The friendly cop from the 1950s, from all the kids' books –all of those roles are what a security guard can do,” he adds. “There’s been a great increase of people wanting security just to have that increased warmth and welcome, so people feel comfortable going somewhere.”

Growing Verticals

Nathan says Ranger Guard has been taking over a lot of positions that were staffed by off-duty police officers, such as neighborhood patrols. The focus there is sending personnel through an area randomly a few times per night, which he says provides a better return than having a static guard at a property all night.

His company has been contracted by police on occasion to check a residential or business alarm, although it’s not part of their formal program. In Colorado, he notes, private security firms are being asked more and more to handle alarm responses. “Adopting these kinds of concepts would greatly unburden police departments,” Nathan says.

One big vertical emerging for Nathan’s business has been new home construction in the booming areas of Texas, as construction supplies are now being targeted by thieves and unscrupulous subcontractors. Often a crew will arrive in several cars and the people inside them have a specific role.

“If you ever see those construction resale shops, 99% of that stuff is jacked from some big corporate builder's site. We built out a program specifically for that need.

Working with home builders used to be a quarter of Ranger Guard’s business and that has declined since the home building boom has waned. But the firm has found new opportunities, such as working with homeowner’s associations to monitor Air B-n-B properties and their owners to ensure covenants and guests aren’t causing trouble. It’s now 2% of their clientele.

Studies bear out the presence of security officers deters crime, especially crimes of opportunity like catalytic converter thefts or shoplifting, Amitay says.

“The retailers are very attuned to this. They need customers in their stores to make money, and if they don’t feel safe being there, they must do something to make them feel safe,” he says. “Obviously we’re using better cameras, we have remote monitoring and putting things behind closed boxes. But there’s no more effective way than to have a security officer present.”

About the author: John Dobberstein is the managing editor of SecurityInfoWatch.com and oversees all content creation for the website. Dobberstein continues a 34-year decorated journalism career that has included stops at a variety of newspapers and B2B magazines.