13 Aug 2020

Ongoing Demand Will Drive Solid Growth for Security Products and Services, According to New IDC Spending Guide

FRAMINGHAM, Mass., August 13, 2020 – Worldwide spending on security products and services will see solid growth in 2020 as organizations invest in solutions to meet the needs of a much larger remote workforce and a wide range of security threats and requirements. According to a new forecast from the International Data Corporation (IDC) Worldwide Security Spending Guide, worldwide spending on security-related hardware, software, and services will be $125.2 billion in 2020, an increase of 6.0% over 2019. As the global economy recovers from the impact of COVID-19, IDC expects worldwide security spending to reach $174.7 billion in 2024 with a compound annual growth rate (CAGR) of 8.1% over the 2020-2024 forecast period. The new Spending Guide also offers expanded coverage of security IT services with the addition of 13 technology detail markets.

"While IT spending is contracting across most industries and technologies in the wake of the pandemic, security spend remains strong, particularly in industries including State/Local Governments, Telecom, and Federal/Central Governments that have become essential in our new environment. Indeed, these three industries will exhibit double-digit growth in security spending through 2024," said Karen Massey, research manager, Customer Insights & Analysis. "Meanwhile, Banking, Manufacturing, and Professional Services continue to have the largest share of security spending. We even see positive movement in security for industries that are currently struggling, such as Retail and Transportation."

The three industries with the largest security investments (Banking, Discrete Manufacturing, and Federal/Central Governments) will account for roughly 30% of overall spending in 2020 and throughout the forecast. The industries that are seeing the greatest increase in security spending this year are Federal/Central Government (10.0%), State/Local Government (8.9%), and Telecommunications (8.5%). These three industries will also deliver the only double-digit CAGRs over the five-year forecast period, led by State/Local Government with an 11.1% CAGR.

Security services will be the largest and fastest growing segment of the security market accounting for roughly half of all spending throughout the forecast and a 10.5% five-year CAGR. Managed security services – single-tenant solutions operated by third-party providers and residing on customers' premises (customer premises equipment) – is the largest category of security services spending, followed by integration services and consulting services. Managed security services will also be the fastest growing segment with a five-year CAGR of 13.6%.

"Complexity abounds with security technology deployment and sprawl requiring assessment and design services," said Christina Richmond, program vice president, Security Services. "While COVID-19 has had a negative impact on many ICT technologies, security services have witnessed increased engagements, especially in outsourcing services such as managed security services (MSS) and managed detection and response (MDR). Security services will see strong demand throughout the forecast period."

Software will be the second largest segment of the security market, led by endpoint security and security analytics, intelligence, response, and orchestration software. Hardware spending will be dominated by network security needs, including firewalls, intrusion detection and prevention, unified threat management, and virtual private networks. Both product segments are expected to recover in 2021 with year-over-year growth rates of 9.6% for hardware and 4.4% for software.

Large (500-1000 employees) and very large businesses (more than 1000 employees) will be responsible for two thirds of all security-related spending in 2020 and throughout the forecast. These two segments will also see the strongest spending growth with five-year CAGRs of 9.3% for large businesses and 8.6% for very large businesses. Medium (100-499 employees) and small businesses (10-99 employees) will spend more than $30 billion combined on security solutions this year.

From a geographic perspective, the United States will be the single largest market for security solutions with spending forecast to reach $56.4 billion in 2020. Four industries – discrete manufacturing, federal government, banking, and professional services – will account for more than $20 billion of the U.S. total. China and the United Kingdom are the next largest country markets with security spending expected to reach $7.9 billion and $7.6 billion this year. Telecommunications and state/local government will be the industries with the largest security spending in China while banking and discrete manufacturing will be the leading industries in the UK.

The Worldwide Security Spending Guide quantifies the global revenue opportunity for both core and next-generation security purchases with detailed forecast data for security spending by 20 industries across nine regions and 43 countries. This version (V2 2020) of the Spending Guide incorporates updated estimates for the impact of COVID-19 across all technology markets as of the end of May 2020. It also offers expanded coverage of security IT services with the addition of 13 technology detail markets, providing greater granularity to the four technology markets previously provided, plus the addition of a fifth technology market.

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.

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About IDC

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 tech media, data and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. . Subscribe to the IDC Blog for industry news and insights: http://bit.ly/IDCBlog_Subscribe.