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Sunday, July 22, 2012

G4S disaster will have little impact on company

Today's Observer suggests that security company G4S's disastrous Olympics may well have reputational consequences for it but that the security group makes so much money in the private sector and developing world that it will hardly notice.

They say that before the Olympics catastrophe, G4S had already announced that it saw a future away from the UK and the apparent cash cow of Whitehall contracts, stating that it planned to earn half its worldwide revenues from emerging markets in Africa and Asia. They add that the company already makes more money from developing countries (£1.84bn in 2011) than it does from the UK (£1.25bn), while it holds more government contracts in the US than it does in Britain.

Even more depressingly, the paper adds that while G4S might struggle in the short term to get UK government contracts, a little-known piece of legislation could provide an additional boost to its revenues in the private sector:

Currently, any employer that needs security staff – a doorman, say, or a CCTV operator – does not need accreditation from the Security Industry Authority (SIA) for having such employees.

However, after lobbying by major security firms, the government is set to change the law, making it mandatory for any company whose business involves a security aspect to get an expensive SIA licence from the Home Office.

Paul Russell, a security consultant, explains that small businesses with minimal security operations will turn to outsourcing firms like G4S because of the potentially huge cost of applying for a company licence.

He says: "When it becomes mandatory for companies to have SIA licences for their in-house security officers, there will be a rush to outsource the work."

He also believes that as more businesses and governments turn to outsourcing across whole areas of their organisations, G4S will naturally expand. "Clients want an easy time, so they think: 'We'll give this contract to the biggest company because they must know what they're doing'.

"Companies like G4S are now also expanding and offering a one-stop shop security facilities service, which smaller security firms simply cannot match."

Therefore, assuming there are no major security breaches during the Olympics, G4S could confidently call this nothing more than a minor blip, resulting in a bruised UK reputation and the hasty scrapping of its new "Proudly protecting the London Olympics" letterhead.

That's because the company could quite easily continue to make billions outside the UK by filling cash machines in India or offering personal security in Sierra Leone. And despite all the bluster from parliament, none of G4S's government contracts, either current or in the pipeline, have yet been cancelled.

Is there no justice at all?
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