Thousands of these warriors-for-hire are currently in Iraq. The United States tolerates this, if only because it means less work for U.S. troops, and many of the armed civilians are American who served in the U.S. armed forces (mainly army and marines, plus some SEALs). U.S. Army Special Forces troops are particularly popular, as these men are all multi-lingual and trained to deal with different cultures. Also in great demand are British SAS and SBS commandoes, who are considered the best in the world. The Brits are also popular because they spend a lot of time overseas and know their way around in dangerous parts of the world. American SEALs are also very popular, as are professional military men from countries like France, Germany, South Africa and many others. But these men are the elite, and probably comprise less than a third of the force. The majority are former police and military men from dozens of countries, including India, Russia and Pakistan, that will work for less. India and Pakistan have a reputation for well trained and disciplined soldiers. Russian Spetsnaz commandos are known to be very resourceful and ruthless. Retired military men from developing countries find the pay very attractive.
These mercenaries are very well paid, and the rates are usually consistent with what they got when they were in uniform. A retired American or British soldier (Special Forces , SEAL, SAS, Etc.) received $50,000-100,000 a year before they got out. Civilian firms offer these men $100,000-250,000 a year, plus fringe benefits (travel and living expenses, life insurance, health care). Because there are a limited number of former Special Forces, SEALs and SAS still in shape (or inclined) for this kind of work, it's a very competitive market. Contracts are typically for a year or less.
Most of the work is just security. If security guards are needed, they are often hired from places Bangladesh, India and Nepal (Gurkhas). Countries with a good reputation at peacekeeping (like Fiji), also find their veterans being attracted to security work. For supervising these security operations, Special Forces, SAS and American Marines (especially those who specialized in security while on active duty) are preferred. For the money being paid, proven experience is required. The more reliable companies have a reputation for carefully checking the backgrounds of the people they hire. The United States and Britain unofficially back many of these firms, making it easier to check the military backgrounds of applicants.
The security work ranges from bodyguards for key personnel, to setting up security for living and working locations. While Iraq and Afghanistan have caused a boom in the demand for mercenaries, the market has been growing for decades. Any company with operations in a lawless part of the world (Africa and parts of Asia and South America) knows that they can only keep their businesses going, and profitable, if they provide adequate security for the oil wells, mines or factories and the people who work in them. Security is a cost of doing business, and if too much security is required, the business moves elsewhere. Companies have also learned that trying to do security on the cheap does not work, which is why the pay rates for capable security firms and personnel are so high.
Another popular use of these former military men is training locals to do the job of security, or simply to create better soldiers from local recruits. Training and supervising local men for security is often a cheaper way to go if you can find reliable local recruits. But often local politics makes this impossible. Tribal politics, or a tradition of corruption, often makes it more effective to bring in foreigners for all security positions. But Third World nations are always looking to improve the skills of their troops, and this provides a steady flow of work for mercenaries.
One thing you rarely see is these mercenaries being used as a combat force. When this does occur, it makes a big splash in the news. But it is very rare. For one thing, it is a lot more dangerous than doing security or training work. But the major reason few mercenaries are used as combat troops is that no major nation will tolerate seeing their citizens do this sort of thing. International law forbids it, but does not prohibit the employment of security specialists or trainers. In some cases, the security force is organized like a combat unit, and sometimes used as one. This has happened in Africa and the Middle East. But few military professionals are willing to cross the line into forbidden combat operations unless they have the backing of their government. Britain does this for the British mercenaries working for the Sultan of Oman, and the United States government quietly does it for operations in various parts of the world. It gets pretty murky, and would take a bunch of lawyers to figure out which "security specialists" are crossing the line, and by how much. Even Russian and Ukrainian fighter pilots hired by some African nations can claim that they are "providing security" as they drop bombs.
Aid organizations (NGOs, or Non-Governmental Organizations) have also been hiring mercenaries, although not in great numbers because of the expense. Altruistic vets will often work on the cheap for an NGO and organize security for the aid workers in dangerous place.
A growing problem is new security companies offering unqualified personnel at below market prices. You get what you pay for in the security business, and because of the war on terror and much increased demand, there will be organizations willing to take a chance, or try and save some money. Both of those options are likely to be very expensive in the long run.
Increasingly, much peacekeeping work is being done by armed civilians. Very well armed, well paid and well trained civilians. Call them mercenaries if you like, but most are former military men who know how to play by the rules. These guys are most frequently used as bodyguards, security experts and trainers. They work for dozens of security companies that have appeared in the last two decades to provide security for peacekeeping, commercial and relief operations. Journalists will also hire bodyguards, and prefer professionals, not local warriors of dubious loyalty and ability. No one keeps an accurate count of how many security mercenaries there are. Based major contracts known to exist, there are probably 5,000-10,000 of them.