The continuing increase in computer hacking is leading to a rise in the use of managed security services in North America. As the corporate world and governments address these new and ongoing threats, managed security services in North America are forecast to grow at a 10.9 percent compound annual growth rate (CAGR) from $16 billion in 2015 to $26.9 billion in 2020, according toIHS Inc.
Changes in technology and architecture are helping this already very large market to continue to grow for the next five years and beyond, saidChristoforos Papachristou, critical communications and cybersecurity analyst for IHS Technology. Software-defined network deployments in cloud and hosting environments will help providers build more scalable, flexible and profitable hosted and cloud security services. The availability of a new generation of virtual customer premises equipment services driven by network functions virtualization will enable carriers to deliver services to the customer edge on a common hardware platform capable of running virtual machines.
The defense, intelligence and security sector represents more than one-quarter of the total managed security services market — the largest revenue generator in North America. Revenues from that one sector are expected to increase from $13.4 billion in 2015 to $23.5 billion in 2020. The next largest sectors in 2015 were banking and finance ($9.3 billion) and industrial utilities ($7.4 billion).
The proliferation of advanced persistent threats will continue to considerably expand the managed security services business across many vertical markets as organizations look to mitigate growing IT security risks, Papachristou said. Also, regulatory and industry compliance has led to greater adoption of managed security by financial services and other vertical industries.
IHS forecasts that managed security services for the industrial utilities sector in North America will grow the fastest, with a CAGR of 13.7 percent, from $7.4 billion in 2015 to nearly $14 billion in 2020. The industrial utilities sector is followed by the insurance industry, with a CAGR of 12.7 percent, healthcare at 12.3 percent and automotive at 12 percent.
Managed security services providers typically exhibit stronger performance in industrial utilities, healthcare and insurance; however, they generally tend to have a healthy mix of verticals where they are active, Papachristou said. In fact, the top eight are well-established service providers in the telecom and IT markets, which indicates a propensity among organizations to include managed security services within larger managed services or outsourcing deals.
IHS predicts that by 2015, roughly 12 percent of overall cyber security enterprise product capabilities will be delivered in the cloud, as cloud-based services or cloud-managed products.