Since Service and Maintenance contracts ensure a predictable flow of revenue, it has led most security system aggregators to view Service and Maintenance as a primary profit center. According to a recent research by IHS validates this trend as as service revenue in the Americas accounted for 63 percent of total security systems integration, while in Europe, Middle East and Africa (EMEA) it accounted for 56 percent.Asia Pacific (APAC) region accounts for 43% of the market.The previous year the sector generated 14.5billion dollars and is speculated to increase to 18.8 billion in 2020.
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The study also revealed that, last year the global market for security systems integration was 60.3 billion dollars, which was inclusive of installation and maintenance services as well. This trend has lead to the market prediction in a span of five years, that is, 2015 to 2020 the services market which includes design and consultancy, installation, and service and maintenance would be the fastest-growing sector of this market on a global scale.
As per the report published in Security InfoWatch, Oliver Philippou, IHS Markit senior analyst has stated that “Service agreements allow integrators to further develop customer relationships, increasing the chance for future upgrades, retrofits and new installations,” He also further added that in the case of large projects, it would also quite often involve service and maintenance contracts. He also stated that, “However, they are usually single-site projects, which can limit revenue potential. Although retail and commercial installations do not always include maintenance contracts, there is still good revenue potential in these markets, as commercial business and retailers with multiple locations can generate substantially more service revenue than a single airport project, for example.”
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Based on the type of products, such as video surveillance, physical access control and intruder alarm systems, and depending on the vertical market, the maintenance contracts varies. It has been observed that most contracts are renegotiated after 3-5 years, and maintenance contracts tend to witness a depreciation in its value during the time of renegotiation, noted the study.