Security

Private Investigators Have Become Twice as Good at Snooping Since 9/11


The decade following the terrorist attacks of 9/11 was a heady time for U.S. security companies. The federal government spent billions of dollars on contracts for workers to guard its buildings, and the private sector followed suit. In another corner of the industry, Americans spent increasing amounts of time online, creating reams of digital information for investigators to sift through. Adjusting for inflation, the investigation and security service industry increased sales 22 percent, to $48.8 billion, according to U.S. Census data released last week.

Most of that money was spent on what can be described as guarding things—hiring security officers, installing security systems, or transporting gold ingots in armored cars. The recession doesn’t seem to have slowed the industry’s roll. That may be because cash-strapped state and local governments outsourced security services as they sought to max out law enforcement budgets, says Steve Amitay, director of the National Association for Security Companies.
 
Finding things out was also a growth area: Total sales by investigation services, which the census defines as gathering information for legal proceedings, background checks, and other uses, expanded 58 percent from 2002 to 2012 after accounting for inflation. But the companies doing the snooping managed to achieve that growth without adding substantially to their ranks of employees. Investigation service companies generated $57,000 in sales for every worker in 2002. By 2012, that number had more than doubled, to $121,000.

As in other industries, technology has likely boosted the productivity of Sam Spades, making background checks and other investigations less labor-intensive. It’s also not a stretch to say we’re just at the tip of the iceberg. Last year brought lots of attention to Palantir Technologies, a big-data company that has raised hundreds of millions of dollars to build analytics software for the three-letter government agencies, and lately, financial companies. Background checks, a $1.6 billion industry that has been dented by slow hiring since the recession, looks like another ripe area for high-tech snoops. ClearStar (CLST:LN), which provides employment-screening technology, floated shares on London’s AIM exchange earlier this month.

Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

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