Outsourcing Security Services

05.10.2022

Outsourcing Security Services

Outsourcing your security – a calculable risk?

Outsourcing security services is more than just replacing your own security personnel with external ones. Experience has shown that what matters is the effort and competence of security, in terms of personnel and location, with which appropriate security and quality assurance measures are implemented. The obvious economic advantages of outsourcing security can be easily identified. Important questions, arising in relation to outsourcing security services, to be clarified are the following:

What risk, including security risks, does the client take when he wants to find the right partner in the market of outsourcing services, with the intangible quality promises of over 2700 security providers, in order to entrust him with your security, millions in value and, if necessary, with the company's know-how?

How does the client receive the quality of security services that he expects or has so far achieved himself?

Also, how do you find the right company that delivers the services it promises in this unmanageable market of security services providers?

Services cost factor

While one's own costs are likely to be relatively concrete, the charging rates of the security service providers vary considerably according to calculation and market structure. However, no quality of security services can be provided if the hourly wages of the employed security guards, which are derived from the billing rates, are significantly below the relatively low collective wages of the security industry.

If the cost comparisons clearly speak in favor of security outsourcing, then the question arises as to the value of corporate security: the security procedures are part of the tools of the trade of the person responsible for security, who constantly analyzes corporate security. The protection and security goals should be defined together with the company management, including security management staff, and laid down in the company guidelines, which must include security regulations. In order to identify an increase in efficiency, the existing security organization must be evaluated by means of an actual security analysis. Optimizations can usually be achieved with shift models and staffing of functions in line with security requirements. Security cost reductions can often be achieved through safety technology.

The cost curve for safety can easily be raised disproportionately in relation to the residual risk. The residual risk must be determined and the assumption of risk must be agreed with the decision-makers. Insurance companies also calculate the risk. Outsourcing creates potential risks, which vary depending on the operation and the tasks that a company wants to solve outsourcing its security, but are to be expected. These caveats should be evaluated before making a decision regarding outsourcing. Personnel factors are e.g. limited possibilities of personnel selection as well as training and further training, influence on qualification, fluctuation as well as loyalty to the guarded enterprise.

Partner selection

In order to make the right choice of outsourcing partner, it is necessary to find out about the guarding market with market volume, sales distribution and company sizes. Here, the associations can provide assistance. In the shortlist, information can then be obtained by means of company evaluation checklists or company self-assessments. The importance of references and the assessments obtained from colleagues who have already gained experience should not be underestimated. 

Of course, even large security suppliers seriously bargain for the billing rate, who likes to pay more than the market demands, but in many cases, the company's own factory security is not dispensed with because the conviction to buy quality is lacking. Unlike, for example, suppliers in the mechanical engineering or automotive industries, where quality assurance regulations have been agreed and tested together with the industry associations, the service sector is only just getting started, e.g., quality seals and DIN standards.

Practice notes

The processes for a meaningful bill of quantities (BOS) must be described in detail. A detailed service instruction with definition of the essential processes and procedures is to be demanded from the security supplier, e.g. gate service, controls of any kind, alarm handling and interventions. The service instructions should be part of the contract.

For the service specifications offer the exact description or the systematized overview for the individual security tasks. In both cases, it is essential to describe both the qualitative and quantitative outsourcing security requirements as precisely as possible.

The aim of a service specification is to define services quality requirements, to describe the security task and the concrete performance of the task, and to make hourly billing rates comparable with performance requirements in order to enable performance control.

The creation of a service instruction is not a problem if a security concept for the object has been developed by the security provider. With many guarding enterprises experiences of the quality assurance can be fallen back.

The guarding security contract should be designed in such a way that bonus and malus systems create performance incentives, facilitate partnership and long-term cooperation in the area of security, but allow short-term exit in the event of gross breaches of contract.

Good cooperation necessitates a certain length of security contract. Contracts of two- or three-year duration with one-year renewal options are recommended.

Guarding security companies know that a change is not without friction problems even for the person responsible for security in the company, so one should make full use of the contractual possibilities of reduction and then part if necessary.

If the services quality is good, the partner should also share in the success. For this purpose, a bonus system, e.g. with an annual payout of approx. 3 percent of the contract sum, could be a promising solution that initially requires somewhat more effort.

Security controlling is replaced by the direct management process in the case of in-house plant security. Since a service provider's ability to exert direct influence is limited, it is necessary to define these processes.

Does insourcing security services make sense? 

Insourcing of security services: beginning of a structural change in security services

In the past, reducing costs, focusing on core business, creating increased flexibility or minimizing business and security risk were just some of the arguments that companies saw as clear advantages for outsourcing security services. However, there is now a noticeable counter-trend to bring outsourced security services and the associated operational security expertise back into the company.

In the 1990s and 2000s, there was a trend reversal across all industries to outsource internal security (service) services such as cleaning, security, facility management, etc. to external service companies. However, there are now many companies that are questioning and re-evaluating this concept. Insourcing or outsourcing of security services? Both models have their raison depending on the individual company-specific requirements for security.

Definitions 

Outsourcing is derived from the English terms "out" and "source" ("to obtain from outside") and describes the transfer of services previously provided internally by a company to an external third party (third-party company). However, a further distinction can be made here between two forms outsourcing:

Internal outsourcing. In this case, the outsourcing service will be provided by a subsidiary in the future.

External outsourcing. In this case, the outsourcing service will be provided by an external company (third party) in the future.

Insourcing refers to the return to the company of services previously provided by a subsidiary or external company (third party) via outsourcing.

Challenges in outsourcing security services

The most commonly outsourced security services include:

• Property and plant security
• Reception and reception services
• Precinct and patrol service
• Alarm and intervention service
• Emergency call and service control center
• Money and valuables transport
• Event protection
• Personal security/escort service

The challenges or problems of security services that are encountered again and again in practice with the topic "outsourcing of security services" are in many places:

• Incorrect and/or faulty (service) specifications
• No or too low qualification requirements for the security service company and its (management) personnel
• Ignorance of the client about possible industry-specific quality standards and security certifications
• Purchasing on the basis of the cheap bidder principle
• Incorrect or faulty selection of security service providers    
• Inadequate management/supervision of outsourced security services and processes on the part of the client
• Insufficient knowledge of the client about the own security processes
• General conditions, including of security, in need of optimization (working environment, premises, work equipment, etc.)

As a result, the security service provider inevitably suffers from considerable performance weaknesses, which in turn lead to corresponding losses in performance and services quality for the client.

Is security insourcing now "in" again?

The general trend is for the provision of security services to become more complex and demanding, and for the responsibility of (service) persons and (service) areas to continue to increase. Particularly in corporate security, the last few years have seen an increase in requirements for data security, know-how protection, early detection of security vulnerabilities and adequate response to security events.

This raises the question of security services and outsourcing vs insourcing for many: should the previously outsourced security service remain with an external provider of security or is insourcing perhaps the better and sometimes "safer" solution for your security?

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