The year 2016 has been a mixed year for Asia in terms of economic growth. Dampening factors such as China’s sluggish economy and slowing global trade has affected the performance of many countries in the region.
The year 2016 has been a mixed year for Asia in terms of economic growth. Dampening factors such as China’s sluggish economy and slowing global trade has affected the performance of many countries in the region. The Asia-Pacific region has posted the highest revenue — $22.9 billion in 2015, $24.6 billion in 2016 and is on track to grow at a CAGR of 6.9 percent to 2020. Service and maintenance services will reportedly rise from $14.5 billion in 2015 to $18.8 billion in 2020.
Mixed growth for Asia-Pacific markets
According to Daniel Lim, Project Manager (Solution) for
Prowler International, the economic slowdown in Singapore was quite evident in Q4 2016, resulting in a concomitant slowdown in the local security market which quietened down except for some government related projects. “Singapore is well known for its political stability but it was still affected by the global economic downturn. In the commercial sector, budgets for security systems have been cut, which in turn have an impact on us.”
Verghese Thirumala, Managing Director at Maxitulin, painted a similar picture for Malaysia, saying: “Compared to 2015 year-to-year, 2016 sales revenue was lower by 15 percent. Quotations submitted were lower by 12 percent but quotation values were higher. Invoices issued lowered by 12 percent.” But he also added that “Though 2016 sales revenue was lower, the bottom line figure was encouraging.”
Nevertheless, it appeared that certain markets in the region maintained their growth trajectory in 2016. “The security market in Australia continues to grow strongly in response to cybersecurity and terror threats as well as the increasing adoption and integration of IP building technologies,” said Danny Berkovic, Managing Director of Fredon Security in Australia.
Patrick Lim, Director of Group Sales and Marketing for Singapore-based Ademco Security Group, named several countries that performed well in 2016. “Philippines, India and Indonesia all continued to be growth markets for us, giving us year-to-year between 10 to 15 percent growth despite supposed political uncertainties in the Philippines. These markets show good stability and growth too in higher value segments such as technology services and moderate growth across most verticals.”
As company budgets and spending continue to be constrained in Asia, and some enterprises are beginning to delay investments and expansion plans, SIs across the region are recognizing the need to re-strategize their business models and leverage new technologies to protect profit margins.
William Goh, Executive Director of Singapore-based ADP Tech, spoke of his company’s strategy of developing its own software and customized solutions to better answer the needs and requirements of its customers. “The era of being a distributor for established brand of the security product or solution is on a downsize trend. SI companies are looking at collaboration or partnership with manufacturers to compete with the competitors,” said Goh.
Growing concerns over terror attacks have also spurred certain SIs to take steps to mitigate potential risks. “We have now expanded into anti-terrorism and I am a certified anti-terrorist specialist. We design security systems, give recommendations and solutions on a holistic approach, taking into consideration the terrorism threats in the region,” said Thirumala.
Other SIs have been riding the growing wave of the Internet of Things (IoT) in Asia and harnessing the potential it brings to the security industry. For Ademco, the Cloud and IoT technologies paved the way for its managed security services which contributed greatly to its 2016 revenue. “Our push for managed services have started to show results, and allowed our customers to continue their expansions in a controlled manner with lesser concern for CAPEX [Capital Expenditure] and the flexibility to scale up their security investments according to their pace,” said Lim from Ademco.
SIs are taking this opportunity presented by the IoT to provide customers with not just an IP solution, but also underlying networking and structured cabling solutions. Berkovic pointed out that IoT-enabled companies like his provide end-to-end solutions. “Our electrical division can provide power and data (copper and fiber) which is the underlying infrastructure upon which we build our IP solutions. Our security division has extensive networking expertise and we are increasingly integrating our solutions with our audiovisual department including room booking systems, visitor management systems and building control systems,” said Berkovic.
Although the outlook for the security market in the region for 2017 seem to differ quite a bit from country to country, the SIs expressed a general reserved optimism that the coming year will be a better one. However, it is clearly evident that these SIs in Asia are seeing future trends and opportunities in cybersecurity, higher-end security technologies, integration and surveillance equipment being leveraged for more than just pure security.