More CIOs are investing in business technology that improves their organisation’s resilience to cyber threats. Worldwide spending on IT security-related hardware, software, and services is forecast to reach $119.9 billion in 2021, according to the latest global market study by International Data Corporation (IDC).
With nearly every industry investing in IT security solutions, enterprise spending will achieve a compound annual growth rate (CAGR) of 9.6 percent over the 2016-2021 forecast period. Worldwide spending on security products and services will total $83.5 billion in 2017, an increase of 10.3 percent over 2016.
IT security market development
“Three overarching trends are driving security spending: a dynamic threat landscape, increasing regulatory pressures, and architectural changes spurred by digital transformation initiatives,” said Sean Pike, vice president at IDC. “While IDC expects spending to continue growing, organisations are actively searching for product and service efficiencies that maximise spend in order to fully address such complex challenges.”
IDC expects security spending to be somewhat evenly spread across four industry sectors in 2017: distribution and services ($19.7 billion), public sector ($18.6 billion), manufacturing and resources ($16.4 billion), and financial ($16.3 billion).
By 2021, however, the financial sector is forecast to move ahead of manufacturing and resources due to a 2016-2021 CAGR of 10.2 percent. Similarly, public sector security spending will nearly pull even with distribution and services by 2021 with a CAGR of 10.3 percent. The fastest growing sector over the five-year forecast period will be infrastructure with a CAGR of 11.8 percent.
On a global basis, banks, discrete manufacturers, and federal or central government agencies will spend the most on security products and services throughout the forecast period. Combined, these three industries will contribute to 30 percent of the worldwide total spending in 2017.
In addition to being among the industries spending the most on security solutions in 2017, federal or central government and banking will be two of the industries that will see the fastest growth in security spending over the five-year forecast, with CAGRs of 10.9 and 10.7 percent, respectively.
The industry that will see the fastest growth is telecommunications, with a CAGR of 12.6 percent. This growth will enable telecommunications to become the fourth largest industry in terms of total security spend in 2021, moving ahead of the process manufacturing and professional services industries.
More than 80 percent of security spending in 2017 will go to services and software. Services spending will be led by two of the largest technology categories – managed security services ($15.25 billion) and integration services ($12.5 billion).
Software spending will be focused on three categories – endpoint security, identity and access management, and security and vulnerability management – that will make up more than 75 percent of the software total this year.
Hardware spending will be significantly smaller throughout the forecast, dominated by network security solutions ($13.7 billion in 2017). In addition to being the two largest technology categories, managed security services and network security will also be the fastest growing categories during the 2016-2021 forecast with CAGRs of 14.3 and 11.4 percent, respectively.
Outlook for IT security market growth
The largest market for security products and services on a geographic basis will be North America with total spending of $37.8 billion this year. The second largest geographic market will be Europe, the Middle East and Africa (EMEA) at $26.2 billion followed by Asia-Pacific (excluding Japan) at $11.5 billion.
APeJ will see the fastest growth in security spending over the forecast period with a five-year CAGR of 19.9 percent. Within the region, China and Malaysia will see particularly strong growth with five-year CAGRs of 25.3 and 20.1 percent, respectively. Latin America is also expected to outperform the overall market with a CAGR of 10.4 percent.