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Security 50 companies experience the COVID impact

Security 50 companies experience the COVID impact
COVID-19's disastrous impact on the security business has resulted in companies considering various options to remain profitable.
COVID-19 has had a nasty impact on security business in 2020. There are no two ways of looking at it. Companies can sugarcoat it as much as they want, but numbers don't lie. The market demand that dipped in the first half of this year is yet to recover. 2020 is a year of crisis for the security industry.

A thorough review of COVID-19’s business impact is necessary at this stage. This report presents a qualitative study of some of the largest security solutions manufacturers' business performance, along with a quantitative survey covering several different companies.
hikvision talks about covid impact
Keen Yao
VP, Hikvision Digital Technology

Struggle at every facet of business

a&s survey of security businesses shows that 77 percent of respondents saw a decrease in revenue between January and June this year. For 35 percent, the decline in revenue was 25 to 50 percent. For another 35 percent, sales dipped as much as 25 percent. While it is possible to point fingers at certain segments that contributed to this decline the most, the reality is that COVID-19 has hurt every single aspect of businesses.

"COVID-19 and the pandemic have naturally impacted the world economy, including supply chains, etc., which had a particular effect on us and our industry as we depend on certain materials and technology from countries around the world," said Ray Mauritsson, CEO of Axis Communications. "Axis had slightly lower sales than anticipated before COVID-19, but we're starting to see a steady recovery and things returning to a more normal state, which will allow us to continue our growth journey."
transition networks speaks of covid business impact
Anita Kumar
GM, Transition Networks

Geographic variations on impact

Indeed, our survey showed that 66 percent of respondents saw the dip in revenue in the video surveillance division, while 19 percent took a hit in their access control business. Keen Yao, VP of Hikvision Digital Technology, pointed out that the nature of the COVID-19 outbreak made its impact in some regions more severe than the rest.

"The pandemic definitely had an impact on our regional businesses where there have been lockdowns, especially in regions or countries where a second wave of the epidemic occurred," Yao said. "On the other hand, we also noticed that developing countries were hit hardest. Most governments have adopted significant emergency financial measures to reduce the impact of the pandemic. Thus, one global trend we see is that government-driven business/project opportunities in the security market are weakening."
Speaking along similar lines, Joon Jun, President of Global Business Division at IDIS, pointed out that countries like South Korea, Singapore, Taiwan, and New Zealand proved it possible to control the virus quickly. Consequently, their GDP and economic outlooks for the year and beyond are in better shape than much of the West. Major economic centers such as London, Los Angeles, Madrid, Milan, and Paris, were hit hard, and parts of Australia have only recently gone into lockdown too. 
Anita Kumar, GM of Transition Networks agreed that some customers had chosen to delay projects because of uncertainty. But on the other hand, they also saw numerous US cities that received CARES Act money starting projects sooner.

"Several of our municipal customers have taken advantage of quiet cities and public spaces to update outdated technology to ensure their safety and surveillance programs optimally operate," Kumar explained. "Our international team experienced more of an impact at the start of 2020, as the pandemic arrived earlier in Europe and Asia."
suprema talks of covid restrictions
Young Moon
CEO, Suprema

Movement restrictions hurt despite demand

Although the market for traditional security solutions has slowed due to the pandemic, there has been an increase in demand for solutions like thermal cameras and contactless access control solutions. But even then, government measures like countrywide/citywide lockdowns limited the number of projects that could be carried out.
"Impact of COVID-19 differed per region," explained Young Moon, CEO of Suprema. "Our business in regions with prolonged lockdown were impacted more as we faced physical difficulties in carrying out business—i.e., installing products and solutions. Other regions with no or short period of lockdown were less affected and even saw growth compared to last year. We've been seeing recovery from the third quarter, as countries relieve severe measures and resume businesses and projects that were cut short due to COVID-19."
BCD international speaks about covid impact
Jeff Burgess
CEO, BCD International

Some strategies that worked

A few companies were able to cut back on expenses to offset losses. Jeff Burgess, CEO of BCD International said that COVID-19 certainly had an impact on the business and they certainly will not experience the same revenue growth as in 2019.

“Yet, to date, we have still been financially successful regardless of the slight revenue shortfall, due in some part to less expenses – travel and trade shows, for instance,” Burgess said.
Another company that managed to minimize damage was Spica International. Tone Stanovnik, the company’s CEO attributed this to a change in the company’s business focus prior to the pandemic.

“In the last couple of years Špica focused into our new product portfolio, based on Cloud technology,” Stanovnik said. “In 2019 and 2020 we see that it was a great and visionary decision, as our growth is fueled by Cloud solution revenue. One of our key strategy pillars is healthy growth of 20 percent year-on-year, and we are happy to reach this goal every year. In 2019 we managed even to overcome this goal.”
Spica speaks of covid
Tone Stanovnik
CEO, Spica International 

Changes that may last longer

In short, the impact of the unprecedented pandemic on the security industry has been nothing less than catastrophic. But most of the large manufacturers are already looking ahead with cautious optimism. They have had to change many of their processes to include more remote work possibilities and ensure employees' and customers' safety while continuing to provide services as before. The next few months may decide how these efforts would make a difference to the industry.
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