THE NEW NORMAL FOR PRIVATE SECURITY INDUSTRY POST COVID-19 PANDEMIC
Covid-19 has three potential fallout scenarios by mid 2020 considering the present disaster management protocol in force; ‘low impact’ infecting 12 crore people; ‘medium impact’ infecting 18 crore people and ‘high impact’ infecting 25 crore people; each with commensurate numbers of hospitalizations and deaths. Nationwide lockdown for 21 days, and under certain extension(s), have brought economic activity to a standstill. Recessionary trend can be seen in overall slowdown on consumption (private & institutional), Investments (includes capital, additional funding and availability of working capital, banking sector issues etc) and slackening dynamics of trade & commerce. In recessions caused by trade & commerce slowdown alone resulting in fall in output indicators, there may be expected a ‘V’ shaped recovery (best case- 1 to 2 qtr, i.e. end of 2020.); there could be a case for ‘U’ shaped recovery given debt or financial sector meltdown though Indian domestic economy is well insulated from global trends (optimum case- 2 to 4 qtr. i.e. mid 2021) whereas a ‘L’ shaped recovery would be worst case scenario, well extended, where recession is impacted due to a large number of additional factors.
Though, there could be minimum to moderate impact across allsectors however MSMEs will be affected the most and at the earliest.MSMEs are the largest employer in India with ~114 Million employment spread across Trade (36%), Manufacturing (31%) and Other services (33%), which includes Private Security Industry (PSI). The geographical distribution of MSMEs is Rural (49%) and Urban (51%). With a workforce of over 89 lakh personnel managed by over 22,000 PSAs; the PSI is one of the largest employment providing servicewithin MSMEs in the country and one of the largest contributors to corporate and social security taxes (GST, PF, ESI, income tax etc.).This Service being manpower intensive and real time responsiveis extremely sensitive to market dynamics; structurally and operationally fragile in nature; in that the slightest deviation would spontaneously transfer the entire impact many fold to all the stakeholders of this Service. A major disruption may leave a lasting injury on the entire Sector.
While we arenow focusing on securing ourpopulation from health hazards and providing relief, especially to the poor, we also immediately need to think long-term to secure the health of our economy, the viability of our businesses, and the livelihoods of our people. The following consideration may help us find our New Normal post Covid-19.
- Localization of service delivery against generalization of contractual designs.
- Faster adoption of Digital medium
- Move from credit business to Cash business.
- Conserve available cash and monetize assets of possible.
- Move towards variable cost models
- Move towards greater Customer Value Proposition through customization
For the eternal optimist there’s always a rainbow at the end of a storm. A cursory study of the World’s most devastating financial crises this century, from the Great Depression of 1929–39 to the Financial Crisis of 2007–08 has proved thata resilient nation and a responsible society, has always come out strongly resurgent from such crisis however severely battered and bruised this pandemic may leave us with.A best-case projection indicates a delightful transformation of perception of the Private Security Industry from a plain vanilla physical guarding service to a new format‘Total Integrated Security Management’ platform delivering completely repackaged modern bundled end-to-end enterprise security solutions.