India’s security and facility management sector revenue likely to rise 9–10 pc in FY27

New Delhi, Aug 12 (IANS) The organised security and facility management companies are expected to see revenues rise about 9–10 per cent this fiscal as labour reforms tighten compliance, a report said on Wednesday.

Labour reforms are tightening compliance standards, leading to stricter payment discipline increasing working capital requirements, the report from Crisil Ratings said.

The revenue growth will be supported by demand from manufacturing, warehousing, commercial real estate and public infrastructure after roughly 15 per cent compounded annual growth between fiscals 2023 and 2026.

Organised security and facility management services companies are entering a more demanding business environment but structural support in their operating model should enable them to be resilient, the rating agency said.

An analysis of 38 rated companies, which together accounted for nearly a fifth of the organised industry’s revenues found that credit profiles will remain stable.

Credit profiles will be supported by contractual pass-through of employee-related costs, healthy cash generation and adequate liquidity buffers, the report forecasted.

The expanding multi-location presence of manufacturing and warehousing companies, including in rural and semi-urban markets, along with sustained government spending on infrastructure, is increasing the addressable market for security and specialised facility management services.

Surveillance tools, workforce management platforms and analytics are improving productivity, shift planning and resource utilisation, while traditional manned security services remain essential for preventive, responsive and customer-facing roles.

The revised labour framework mandates stricter timelines for wage payments and statutory remittances, reducing operational flexibility and modestly increasing dependence on external funding.

However, most organised players have pass-through clauses in customer contracts, which should help safeguard profitability as the cost mix shifts more towards retirement and social security benefits.

“Customers increasingly prefer organised providers that can offer scale, compliance, technology and dependable service quality. This should support healthy revenue growth this fiscal and further strengthen the competitive position of organised players,” said Himank Sharma, Director, Crisil Ratings.

The firm forecasted that organised players with stronger administrative systems, deeper client relationships and a greater ability to absorb transition costs will have a clear advantage over smaller, unorganised peers.

Organised players will be better positioned to comply with revised labour regulations and differentiate themselves through timely statutory remittances and technology-enabled service delivery.

—IANS

aar/pk