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Security firms expect bigger business from outsourcing trend

Rudijanto
Contributor
Jakarta

Although incidents of robbery -- especially of individuals who
have just withdrawn large sums of money from the bank -- have
increased in recent times, attacks on armored vehicles carrying
cash either to refill ATMs or for companies has become a new and
very real phenomenon in Indonesia.

In addition to rising crime rates, terrorist threats will
continue to be a major concern for both individuals and companies
in the country. These unhappy circumstances have, however, become
a blessing in disguise for local security companies.

President director of security company PT Hill Konsultan
Indonesia Nick Duder admits that growing security concerns have
contributed to an increase in demand for the company's risk
management and security services.

Indonesia's security-service market is indeed huge. In fact,
the largest part of the market remains untapped since most
companies still prefer to handle their own security issues,
rather than calling on external forces.

"The total market is big but the outsource market is still
relatively small. It takes time for people to change their
attitudes and start to outsource their security needs. Large
national banks started to outsource, but the total volume is
still largely in-house," Bill Thomas, the president director of
Securicor Indonesia, told The Jakarta Post last week.

That is why even after the Sept. 11 terrorist attacks on the
World Trade Center (WTC) towers in the U.S., little impact on the
local security business was apparent.

"Since the Sept. 11 attack on the WTC towers in the U.S., our
business here did not increase significantly, while in other
countries, particularly Hong Kong, our business grew by 10
percent," Bill says.

Local companies tend to boost their in-house security by
employing more security guards rather than outsourcing security
services from professional security-management companies.

Under the global trend that emphasizes the value of
outsourcing, Indonesian companies are slowly learning to
outsource their non-core businesses, including security services.
Awareness of the value of outsourcing is indeed growing, but at a
very slow pace.

The factor that hampers this outsourcing trend is that mergers
of corporations, especially banks, have created a surplus of
manpower. Instead of laying-off these people, corporations prefer
to transfer them to security units within their main body.

Such moves not only create unprofessional, untrained and
unselected security personnel but also tend to increase crimes
within corporations.

President Director of PT Secom Indopratama (Secom) S. Rahardja
said that 74 percent of criminal incidents in Indonesia involved
insiders.

"In fact, the biggest threat nowadays does not come from
outside but mostly from inside corporations, namely from
employees themselves," he said.

The outsourcing itself benefits corporations by giving them
more time to focus on their core business. Aside from this
advantage, outsourcing tends to be cheaper than maintaining an
in-house security force.

"Outsourcing is cheaper because you pay for what you get,
while in maintaining an in-house security unit, you pay for what
you have -- and what you have is usually more than what you
need," Bill of Securicor said.

Meanwhile, Director of PT Teknodev Inti Utama (Teknodev)
Charles Aryopati said that the total cost of outsourcing is far
cheaper than maintaining in-house security personnel, which can
be more costly due to training and equipment.

"Many Indonesian companies are still hesitant to follow the
trend. They prefer to do it step by step," Charles said.

Outsourcing non-core businesses is already a global management
trend. Slowly but surely Indonesian corporations will start to
follow global footsteps in the management of their businesses.

With crime on the increase and the threat of terrorism,
Indonesia has become the ideal market for security companies.
Even under this current condition, Bill admitted that his company
enjoys an average annual growth of 10 percent in terms of
revenue.

Another company, Secom, revealed 20 percent growth per annum,
though Rahardja admits that his company experienced stagnant
growth during the peak of the Indonesian economic crisis between
1998 and 1999.

Teknodev reveals that it has enjoyed a 75 percent growth in
alarm monitoring services and 10 percent in security guard
services -- with clients from state-owned and national banks.

However, competition in this growing market is tough. Nick
admitted that competition has never been greater.

And Charles believes that companies with poor services will
not be able to survive.

Only the companies with the best security systems will grab a
big market share. Almost all security companies boast that their
systems are the best and the most secure. However, clients are
the best ones to judge their performances.

Outsourcing security to professionally managed security
companies might be the trend of the future, but security service
companies still have to work hard to gain trust and market
confidence.

As a part of efforts to gain acceptance from the wider public,
security companies still have to prove that they are as
indispensable as insurance companies, especially in these
uncertain times.

"There are losses that insurance company cannot cover or
prevent, for instance, the loss of opportunity and reputation,"
said Rahardja.

The need to educate the market is certainly the task of all
security companies that want to grow in Indonesia. But the most
important part of this education is a concrete action to protect
client's property, reputation, and business opportunities.