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BW Businessworld

India’s Private Armies

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MEETING Vikkram Singh, 60, ace detective and former army intelligence officer, in his office near New Delhi’s Qutab Minar, can be slightly unnerving. As you enter the room, the door automatically locks behind you, activated by a small button under Singh’s wooden desk. A touch nervously, you take in the room, with its dim lights, shut window blinds, and an array of awards — World Association of Detectives’ 2006 Investigator of the Year and prizes from the Home Ministry. Figuratively speaking, Singh wears many hats: managing director of Delhi-based detective company Lancers, and chairman of both Association of Private Detectives of India (APDI) and Central Association of Private Security Industry (CAPSI). His literal choice of hat is also eccentric — a navy blue golf cap that goes well with his imperial moustache and gold-rimmed spectacles. If Singh looks pleased with himself, he has good reason. “Each time there is a bomb blast, there is a 10 per cent increase in demand for security systems and a substantially higher demand for physical security,” Singh says, as he gently drums the fingers of his right hand — flaunting two glistening rings and an OM tattoo on the upper palm — on the table. About 10 km away, in nearby Gurgaon, the new wave of growth in private security is being ridden by another unlikely intrapreneur. Rupal Sinha, 39, the ever-smiling and soft-spoken head of G4S, India’s largest private security firm, seems like Singh’s perfect antithesis. A professional lawyer, she began her career in the legal department where she was broken into the business by being “made to stand as a security guard in front of the US embassy and the Maruti office in Gurgaon”, she cheerfully recalls.Their persona may differ, but Singh and Sinha share a common cause: they and numerous other private security agencies mushrooming across the country are meeting an unprecedented surge in the demand for private security. From government offices to corporate facilities, private homes, neighbourhoods and shopping centres, virtually every organisation is looking for ways to protect itself from the terror threats, street crime and corporate espionage that are increasingly plaguing India. Much of the demand for private security has been precipitated by the series of bomb blasts that have rocked India over the past decade. India is now one of the world’s most terror-prone countries, with a death toll second only to Iraq, says a report from the National Counterterrorism Center in Washington. India’s crime rates, already some of the highest in the world, are also rising, as is the incidence of corporate espionage, though there are no official figures for this. But with a police force of just about 1.6 million, India has just 1.45 cops for every 1,000 citizens, much lower that the global average of 3 per 1,000, as per a UN report. Little wonder, then, that the country is home to the largest private force in the world, with 5.5 million guards across the country, according to CAPSI. In fact, the private security industry, which is employing an additional one million new people every year, is already India’s second-largest employer and could soon overtake the largest, manufacturing, which employs 5.6 million people. The organised private security business — industry estimates put its worth at Rs 5,000 crore — is growing at 35 per cent. (The total size of the sector including smaller firms that do not file IT returns is pegged at Rs 10,000-15,000crore.) This year alone 200 new security companies were established, including one promoted by DLF, signalling the entry of mega corporates into the business. Besides, this year, Mumbai-based TOPSGRUP also acquired a majority stake in Shield Guarding of the UK for Rs 125 crore in an allcash deal. “This is the first-ever acquisition of an overseas security company by an Indian firm,” says Rahul Nanda, the company’s chairman and managing director. Companies such as G4S, which saw a 30 per cent revenue growth last year — gross profit margins are around 20 per cent for companies in the sector — are working to become more professional, offering sophisticated security solutions and hiring managers from across industries. The Rising Threat What keeps the industry humming is the unending threats terrorists are issuing hotels, malls and other public places. Most of the demand for private security solutions — guards, electronic surveillance and detective services — is coming from malls, hotels, educational institutes, hospitals, and IT and finance companies, says Sinha, but “we are also receiving queries from residential associations for beat patrols”. “In view of the recent blasts, we have increased our security by 10 per cent in all our malls,” says B.S. Rawat, general manager of Pacific Malls, which owns malls in Agra, Delhi and Ghaziabad. “We have added cameras, metal detectors and scanners.” Similarly, in the past six months, retailers such as Future Group and Nirmal Lifestyle have beefed up security. “Our budget for security has gone up over the past year,” admits Dharmesh Jain, Nirmal’s chairman and managing director, who has also hired a retired assistant commissioner of police to handle security. With terrorists now targeting the hospitals where the injured from blasts are brought, the demand for security services from hospitals has also increased. “Over the past few years, hospitals have become more technologycentric, so the need for a comprehensive security system has increased,” says Wockhardt Hospitals’ CEO Vishal Bali. Hotels too are beefing up. “The overall surveillance in our hotels has increased, especially at the entrance,” says Farhat Jamal, president and COO of The Grand Continental, which owns properties in Delhi, Mumbai, Goa and Srinagar. Private security companies say that a significant share of the new demand for security services comes from IT and financial firms. But when contacted by BW, IT companies — including Infosys, Wipro, Cisco, HP, Yahoo, Google, Symphony Services, and even Indian Institute of Science or IISc (the target of a terror attack in 2005) — declined to comment, citing security issues. Banks, which have traditionally invested heavily in security, are also upping the ante. “We have enhanced both our physical security and electronic security measures, intrusive as well as non-intrusive,” says a Standard Chartered Bank official who wished not to be named. “We have also made background checks for vendors and guards more stringent.” With employee fraud rising, background checks are also a commonly solicited service, as iscorporate espionage. “If one of our clients suspects a company of copying its products, we may lead an investigation to resolve the problem,” says Anil Dhawan, president of the Asian Association of Professional Security (APSA) and senior vice-president at G4S. Adds Singh, “FMCG and pharma companies also approach private security companies to track counterfeiters.” To meet the increasing demand, CAPSI has approached state governments to organise job fairs across the country, mostly in rural areas. CAPSI expects India’s 15,000 odd-private security companies to recruit 1 million new guards every year, from this year onward. Already, 45,000 guards have been recruited from Rajasthan, after a memorandum of understanding (MoU) was signed with the state government last May. In exchange, the government will fund the guards’ training. “Guards will be trained for 21 days by a district soldier board and a trainer from the association, who will be paid by the state government,” says Singh. In the next few months, CAPSI hopes to seal agreements with the state governments of Punjab, Orissa, Gujarat, Madhya Pradesh, Andhra Pradesh, Tamil Nadu and Chhattisgarh. However, the industry remains largely unorganised, security norms are poorly enforced and guards rarely trained and appropriately compensated. Tumultuous Adolescence Mohammad Khan, 45, has been working in Delhi as a security guard for 13 years since he left Bihar. He works 12 hours a day at a residential complex in East Delhi’s Mayur Vihar for Rs 3,000 per month, has never heard of social and medical benefits, and has to do odd jobs forthe inhabitants to make a decent living. “Four years ago, I joined a private security company in Noida and was trained for 15 days,” explains Khan in Hindi, sitting outside in the night on a shaky chair, wrapped in a blanket. Khan presents the typical private security guard in India — underpaid, under-trained and overworked. “Trade unions have not been able to make significant inroads into the private security industry,” says M.K. Pandhe, president of CITU, one of India’s largest trade unions. “Naturally, private security guards work in terrible conditions and are grossly underpaid.” Pandhe says that while some companies directly hire private security guards, most hire through private agencies so that they don’t have to provide pay or benefits on a par with their own employees. There are other grouses, too. “Private security companies provide a set of people but they do not train them and it remains up to us to manage them,” says Pacific Mall’s Rawat. Admits G4S’s Sinha, “Quality is not yet the rule of the game.” With the advent of Private Security Agencies Regulation Act 2005, certain standardisation has been set in motion (see box ‘Legal Limit’ on page 38). However, as most companies remain reluctant to pay for quality, private security agencies continue to compete mainly on price. Perhaps understandably, top corporates such as Infosys — facing perceptible terror threats — have been asking the Ministry of Home Affairs to send battalions from the Central Industrial Security Force (CISF), a 106,000-strong armed force that protects government undertakings’ property and employees. “We have asked the government to allow CISF to provide Infosys security services,” says T.V. Mohandas Pai, the company’s director of human resources. “We are now working on the details.” The Union Cabinet has already approved the recruitment of 40,000 new CISF personnel this year. “This will cover services to private companies, if CISF’s status is amended,” says deputy commandant Rohit Katiyar. “CISF employees go through a demanding one-year training and are equipped with the latest weapons. Also, many graduates and even post-graduates join the force, as CISF offers job security and pays better than private companies.” Some private security companies are, however, trying to sell a different concept. For instance, Gurgaon-based TerraForce Security Services — a member of the DLF family that started operations six months ago — is building a ‘graduate security team’ that it calls ‘White Force’. The company has hired 60 graduates from universities across the country as security officers. “These people are employed at a salary of Rs 8,000 per month in addition to provident fund and gratuity, and within three years will be integrated into the management team,” says Harsh Wardhan, TerraForce’s president and CEO. While few are ready to pay for quality — White Force will cost two and half times more than the company’s other security guards — certain embassies, five-star hotels and a highend South Delhi mall have already hired ‘white’ security officers, according to Wardhan. Nonetheless, private companies may not be able to offer security services that could match up to CISF’s, simply because they are not empowered by the government. “CISF works closely with the local police, our guards are well armed and can arrest people,” says Katiyar. In contrast, private security companies cannot even apply for gun licences. “In order to have armed guards, we need to hire ex-servicemen or civilians who already have an individual gun licence,” says Ken Tremenheere, executive director at G4S’s cash services company. “Also, arms can only be used in self-defence and guards cannot shoot anybody above the knee.” All these reduce private security guards to mere bystanders, who cannot deter an armed criminal or even a motivated, unarmed thief. Hopefully, that may change, as the industry urges the government to use private security as a first line of defence. The Government’s Private Eye With its 5.5 million-strong force, the private security industry could play a crucial role in helping the government deal with internal security issues. “The government will need the participation of corporates to face the country’s new security threats,” says Raghu Raman, CEO of Mumbai-based Mahindra Special Services Group, a division of auto major Mahindra & Mahindra that provides risk and governance consulting services. But unlike countries such as the US, where private security companies have virtually become a part of the army, Indian companies have largely been kept away from the country’s police force and intelligence services. “Private guards can work with police, acting as a first level of security,” says APSA’s Dhawan. Already, G4S has about 200 guards posted in the Delhi Metro, and also handles the entrance at India Premier League matches. “Delhi has only 75,000 policemen but over 300,000 security guards,” says Singh. “These guards could become the eyes and ears of the government.” He says CAPSI has submitted a proposal to the home ministry, which has been accepted. “We are now working on ways to implement it,” he says. Despite repeated attempts, ministry officials could not be reached. An email sent to Omkar Kedia, a ministry spokesperson, remained unanswered. According to Singh, CAPSI is also in the process of signing an MoU with the National Disaster Management Authority (NDMA). “Private security guards can provide first-hand response services to deal with disaster management situations, such as helping in evacuation,” he says. “But for the government to pass on responsibilities, the industry needs to mature and evaluate itself,” says Sinha. “Security norms need to be applied strictly, and companies that don’t meet those standards should not be able to bid.” More importantly, the line between the duties of government and private security agencies will need to be carefully drawn. In the US, critics have suggested that the government has gone too far in putting the state’s responsibilities in the hands of private companies. Blackwater Worldwide, the world’s largest private security company, was sued last year by the Center for Constitutional Rights, a New York-based legal and educational organisation, on behalf of an injured Iraqi and families of three of the 17 Iraqis killed by Blackwater employees during the infamous Baghdad shootings on 16 September 2007. Critics feel that US security companies’ complex legal status and close links to US intelligence services and the US State Department have too often placed these organisations above the law. “While, for instance, regular soldiers were punished for their behaviour in Iraq and Afghanistan, US private security officers were not,” says Shantanu Chakrabarty, professor of history at University of Kolkata and formerly with Delhibased Institute for Defence Studies and Analyses (IDSA). “But given the current situation, private security companies have become essential.” Thus, while India’s huge private security force is a great opportunity, preventing it from growing out of control could be a daunting challenge.  


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