Towards the end of 2018 I had a unique opportunity to conduct a study of the entire background screening industry on behalf of a client. This was a very long, in-depth study that dove deep into many of the factors and trends we see today. We have long thought that the industry was at around 3 billion dollars in annual revenue, but with very little information to support it. For this study, I was able to explore over 400 screening firms (all members of NAPBS) whose business is ‘mostly’ retail background screening. From this I was able to estimate revenue, size, growth, employee count, platforms and many other important indicators. From this, I was able to extrapolate some very interesting data. Here are some of the highlights:
- The CAGR (Compounded Annual Growth Rate) is about 2.9% and has been stable for the last few years, as such it looks to maintain the same rate for the next two years. This is also verified by the annual IBIS report that has been making its way around the industry for the past few years.
- The top 3 CRA’s account for 50.5% of the total annual revenue of the entire industry, $1.475 Billion. The total industry number is $2.971 Billion.
- There are 10 CRA’s with revenue between $100 Million and $650 Million.
- There are nearly 10 other CRA’s with revenue between $25 Million – $100 Million, they account for $238 Million in revenue.
- $2.3 Billion of annual revenue goes through proprietary software built and maintained by the CRA.
- Third party platforms account for only $500 Million of screening revenue.
- By far the largest third party platform is TazWorks, accounting for nearly $170 Million in revenue.
- The remainder of the third party platforms account for $330 Million in revenue. They include: Accio $116 Million, Deverus $75 Million, ClearStar $58 Million, FRS $44 Million and BackChecked at $30 Million. There was another $85 Million in revenue that I couldn’t account for the platform.
- There are over 240 CRA’s with less than $1 Million in revenue
- The largest ten screening firms by revenue are; HireRight, Sterling, First Advantage, Accurate Background, Checkr, Career Builder, Cisive, Vertical Screen, Asurint and CastleBranch.
- There are fewer CRA’s in the industry than previously thought. While there are still thousands of companies claiming to do “background checks,” only the ~400 used in the study that are NAPBS members really matter for our interests. The others are PI firms and HR outsourced firms, but they are not true CRA’s.
I will be writing more about these trends in the coming weeks and months and digging much deeper into some of them. This study was both eye opening and thought provoking when thinking of different ways to grow this industry. It also begs the question on what exactly CRA’s are doing to grow and do they have a plan? I have many ideas, as do others I talk with frequently. The fact of the matter is that we are now a mature industry and growth will slow unless screeners think outside the box. What does this mean? Well, are you focused on pre-employment and not post-employment? Are you adding product? Are you automating processes to make yourself more profitable? There are many ways to still grow your business, but yesterday’s thinking won’t do.
If you are looking for more information on the industry or simply looking for ways to grow your business, hit me up! We are currently helping many companies in our industry, both vendors and CRA’s, and they are seeing significant results. Feel free to grab me at a conference or email me if you have any questions about the overall industry.
Best,
Jason
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