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Sector Overview

The Mumbai attack of 26/11 brought the Indian private security industry or the manned guarding industry in the focus. The security guards of Hotel Taj were the first ones to encounter the terrorists and many experts commented that had the guards been trained and armed to face the situation, the story would have been less tragic.

The industry was born in the 60’s with a handful of players. According to industry sources, Private Security Industry is estimated to be worth INR 22,000 crore and is likely to cross INR 40,000 crores by 2015. The industry growth could be attributed to the key drivers like growing urbanization and increasing insecurity, mushrooming of shopping malls and self contained townships, frequent terror attacks, shortage of police personnel and last but not the least security agency itself being a profitable business. A more economic justification for engaging private security is that insurance companies particularly fire insurance carriers will give substantial discount to sites as presence of security reduces odds of incidence.

As early as in 2006 it was reported that the industry was paying Rs 10,000 crores to the exchequer by way of service tax, provident fund, contributions to employees insurance etc. The PSA’s have become an important segment of the economy, by not only contributing to the Government but by generating employment opportunities for urban and the BPL youth.

The industry’s most notable growth has been in the past 6-7 years, with a CAGR of over 25 %. The number of companies operational is approximately 15000 including both unorganized and organized. There are over 5 million private security guards available as compared to 3.2 million police officers contributing to one of the major factors in boosting the demand in the industry. Today the industry is perceived to be growing at 40%.