The key trends driving IT security-related revenues to $133.7 billion
Cybersecurity solutions demand has remained strong during 2018, as more CIOs and CTOs need to ensure that their digital transformation projects have a high degree of digital trust built-in. Data privacy-related legislation has also fuelled the market for expert professional services that are skilled in IT security compliance.
According to the latest global market study by International Data Corporation (IDC), worldwide spending on security-related hardware, software, and services is forecast to reach $133.7 billion in 2022. Although spending growth is expected to gradually slow over the 2017-2022 forecast period, the market will still deliver a compound annual growth rate (CAGR) of 9.9 percent.
As a result, security spending in 2022 is anticipated to be 45 percent greater than the $92.1 billion forecast for 2018.
IT security market development
"Privacy has grabbed the attention of Boards of Directors as regions look to implement privacy regulation and compliance standards similar to GDPR. Frankly, privacy is the new buzzword and the potential impact is very real. The result is that demand to comply with such standards will continue to buoy security spending for the foreseeable future," said Frank Dickson, vice president at IDC.
According to the IDC assessment, security-related services will be both the largest ($40.2 billion in 2018) and the fastest growing (11.9 percent CAGR) category of worldwide security spending.
Managed security services will be the largest segment within the services category, delivering nearly 50 percent of the category total in 2022. Integration services and consulting services will be responsible for most of the remainder.
Security software is the second-largest category with spending expected to total $34.4 billion in 2018. Endpoint security software will be the largest software segment throughout the forecast period, followed by identity and access management software and security and vulnerability management software.
The latter category will be the fastest growing software segment with a CAGR of 10.7 percent. Hardware spending will likely be led by unified threat management solutions, followed by internet firewall and content management.
IDC analysts believe that banking will be the industry making the largest investment in security solutions, growing from $10.5 billion in 2018 to $16 billion in 2022. Security-related services, led by managed security services, will account for more than half of the industry's spend throughout the forecast period.
The second and third largest industries, discrete manufacturing and federal or central government ($8.9 billion and $7.8 billion in 2018, respectively), will follow a similar pattern with services representing roughly half of each industry's total IT security spending.
The industries that will see the fastest growth in IT security spending will be telecommunications (13.1 percent CAGR), state or local government (12.3 percent CAGR), and the resource industry (11.8 percent CAGR).
The United States will be the largest geographic market for security solutions with total spending of $39.3 billion in 2018. The United Kingdom will be the second largest geographic market in 2018 at $6.1 billion, followed by China ($5.6 billion), Japan ($5.1 billion), and Germany ($4.6 billion).
The leading industries for security spending in the U.S. will be discrete manufacturing and the federal or central government. In the UK, banking and discrete manufacturing will deliver the largest security spending while telecommunications and banking will be the leading industries in China.
China will see the strongest IT security spending growth with a five-year CAGR of 26.6 percent. Malaysia and Singapore will be the second and third fastest growing regions with CAGRs of 21.1 percent and 18.2 percent, respectively.
Outlook for IT security applications growth
From a company size perspective, large and very large businesses will be responsible for nearly two thirds of all security-related spending in 2018. Large and medium businesses will see the strongest spending growth over the forecast, with CAGRs of 11.8 percent and 10 percent respectively.
However, very large businesses will grow nearly as fast with a five-year CAGR of 10.1 percent. Small businesses will also experience solid growth (8.9 percent CAGR) with spending expected to be more than $8 billion in 2018.
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