Market Trends for Cleaning and Security Contractors
Service contractors in the cleaning and security industries can gain a competitive advantage in crafting successful business plans by understanding market trends and research, economic outlooks and industry-specific predictions. This is especially true as there are ongoing debates among economists and researchers about the possibility of another recession.
For cleaning and security employers, accurate data is particularly important because of relevant industry challenges, such as increased demands from clients. However, by understanding the market trends related to facilities management and comprehending the broader macroeconomic picture, it is possible to stay one step ahead of the competition during this economic climate.
Mergers and Acquisitions
Capital waiting to be deployed into the private equity market, or so-called dry powder, rose 8% to a record $2.59 trillion globally in Dec. 2023, according to S&P Global Market Intelligence. Loosely stated, that means $2.59 trillion in idle cash is available amongst private investment partnerships that buy and manage companies before selling them.
A major factor in the accumulation of dry powder is the hesitancy to deploy capital in the current macroeconomic environment. Measured from January to November 2023, total deal value dropped 35.6% to $437.85 billion from $679.48 billion between the same 11-month period one year ago, reported S&P Global Market Intelligence researchers.
Insights from both the BSCAI’s M&A Watch Report and Robert Perry’s 2023 white paper on the U.S. Contract Security Market both identified mergers and acquisitions activity starting to return in Q3 2023 after a decline since 2019 and projected more deal volume in coming quarters.
Sustainability
Customers and some government agencies are setting sustainability targets and expect suppliers to support environmental, social and governance (ESG) investing. Some examples of ESG investing include energy consumption and efficiency, carbon footprint, waste management, air and water pollution and natural resource depletion.
Cleaning and security contractors can support ESG investing through green cleaning, electric vehicles, fair compensation, supply change management, diversity and inclusion and data security.
In January 2023, the European Union finalised its Corporate Sustainability Reporting Directive, which will require 50,000 companies to file annual reports on their business risks and opportunities related to social and environmental issues, and how their operations affect people and the environment.
Technology
Artificial intelligence breakthroughs could have a huge impact on the global economy. Researchers estimate that AI tools could drive a $7 trillion increase in GDP and lift productivity growth by 1.5 percentage points over a 10-year period, according to a Goldman Sachs report.
Workflow changes triggered by AI advances could expose roughly 300 million full-time jobs. Although this means that approximately two-thirds of U.S. occupations could be impacted by AI, the changes in automated work may only partially impact different job roles by complementing the work currently performed by people, rather than substituting AI for all of those workers.
Examples of how AI could impact service industries include: eliminating hiring biases, generating content for policies, procedures and marketing campaigns, deploying resources more efficiently and accelerating workflows or increasing capabilities within workflows.
Researchers believe that administrative personnel and attorneys would experience most of the impact, while physically demanding or outdoor workers would experience less of an effect. However, advancements in technology that initially displaces workers generally creates employment opportunities in the future.
Global growth predictions
As for worldwide predictions, the International Monetary Fund stated on January 30th that the global growth prediction is 3.1% in 2024 and 3.2% in 2025. That number is 0.2% higher than the October 2023 projected number, because of greater-than-expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China, reads their report.
Despite the somewhat optimistic predictions, the forecast for 2024 – 2025 is below the historical average of 3.8% between 2000 to 2019. That is due to elevated central bank policy rates to fight inflation, a withdrawal of fiscal support amid high debt weighing on economic activity and low underlying productivity growth, according to the International Monetary Fund.
Crime perception
A 2022 study of security professionals working at major U.S. companies that was released last year reported that roughly 88% of survey respondents experienced a dramatic increase in physical threat activity. Those same respondents expected that threat to grow. Survey participants also agreed that companies suffered harm and missed threats due to a “lack of unified protective intelligence.”
Roughly 77% of participants believe there was more crime than a year ago. Sixty-three percent of participants described the crime problem as either “extremely or very serious,” and that number rose from 54% when last measured in 2021.
Across the globe, private security guards are replacing police officers. Social researchers believe income inequality, loss of police officers, an increase in homelessness that causes heightened anxiety and increased crime rates in different parts of the country are driving that change.
Moving forward
Better planning for your next business moves and managing business expectations for 2024 involves understanding national market trends. Inflation and interest rates, building occupancy and technology are just a few.
To continue learning more about the job market and employment trends, review our eBook titled: Data Report: Labour Trends. Then speak with one of our specialists to learn more about how combining that knowledge with industry-specific technology can help your business survive and thrive during this challenging period.