19 Oct 2017
FRAMINGHAM, Mass., October 19, 2017 – Worldwide spending on security-related hardware, software, and services is forecast to reach $119.9 billion in 2021, according to a recent update to the Worldwide Semiannual Security Spending Guide from International Data Corporation (IDC). With nearly every industry investing in security solutions to meet a wide range of threats and requirements, spending is expected to achieve a compound annual growth rate (CAGR) of 9.6% 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% over 2016.
"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, program vice president for IDC's Security Products and Legal, Risk, and Compliance programs. "While IDC expects spending to continue growing, organizations are actively searching for product and service efficiencies that maximize 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%. Similarly, public sector security spending will nearly pull even with distribution and services by 2021 with a CAGR of 10.3%. The fastest growing sector over the five-year forecast period will be infrastructure with a CAGR of 11.8%.
"Ever-changing security threats, fear of data breaches, and regulatory compliance will continue to drive security investments across all industries," said Eileen Smith, program director, Customer Insights and Analysis. "On a global basis, banks, discrete manufacturers, and federal/central government agencies will spend the most on security products and services throughout the forecast. Combined, these three industries will contribute to 30% of the worldwide total spending in 2017."
In addition to being among the industries spending the most on security solutions in 2017, federal/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%, respectively. The industry that will see the fastest growth is telecommunications, with a CAGR of 12.6%. 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% 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% 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%, respectively.
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)(APeJ) 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%. Within the region, China and Malaysia will see particularly strong growth with five-year CAGRs of 25.3% and 20.1%, respectively. Latin America is also expected to outperform the overall market with a CAGR of 10.4%.
From a company size perspective, large and very large businesses (those with more than 500 employees) will be responsible for roughly two thirds of all security-related spending throughout the forecast. IDC also expects very large businesses (more than 1,000 employees) to pass the $50 billion spending level in 2019. Small and medium businesses (SMBs) will also be a significant contributor to BDA spending with the remaining one third of worldwide revenues coming from companies with fewer than 500 employees.
The Worldwide Semiannual Security Spending Guide quantifies the global revenue opportunity for both core and next-generation security purchases. The guide offers detailed forecast data for security spending by 20 industries across eight regions and 53 countries. Unlike any other research in the industry, the comprehensive spending guide was designed to help IT decision makers to clearly understand the industry-specific scope and direction of security-related spending today and over the next five years.
About IDC Spending Guides
IDC's Spending Guides provide a granular view of key technology markets from a regional, vertical industry, use case, buyer, and technology perspective. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading media, data and marketing services company that activates and engages the most influential technology buyers. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn.