SECURITY SPENDING MARKET ANALYSIS

The Global Security Spending Market size is estimated at US$ 152.81 Billion in 2023 and is expected to reach US$ 258.51 Billion by 2030, grow at a compound annual growth rate (CAGR) of 7.8% from 2023 to 2030.

The security spending market encompasses expenditures made by various entities to safeguard their assets, data, personnel, and infrastructure against potential threats and vulnerabilities. As the digital landscape continues to evolve and traditional security challenges persist, organizations across industries are allocating substantial resources to address security concerns. This market includes investments in a wide range of solutions and services, such as cyber security measures, physical security systems, risk assessment tools, surveillance technologies, and personnel training. With the rising frequency and sophistication of cyberattacks, data breaches, and physical security breaches, the security spending market has gained significant traction. Organizations recognize that proactive security measures not only protect their operations but also preserve customer trust and maintain business continuity in an increasingly interconnected world.

The security spending market's growth is driven by factors such as the growing adoption of digital technologies, the increasing emphasis on regulatory compliance, and the rising awareness of security risks. As businesses and governments alike face evolving threats from both digital and physical domains, they are aligning their strategies with comprehensive security solutions to safeguard their assets and reputations. The market's dynamics extend beyond traditional enterprises to encompass critical infrastructure, public institutions, and even individual consumers seeking robust security measures in an increasingly interconnected and data-driven environment.

Security Spending Market Regional Insights

• North America: North America is the largest market for security spending, accounting for a share of over 35% in 2022. North America, including the U.S. and Canada, holds a significant share of the global security spending market. The region's advanced digital infrastructure, extensive business operations, and reliance on technology make it a prime target for cyber-attacks and other security threats. As a result, organizations in North America allocate substantial resources to cyber security solutions, including threat detection, incident response, and data protection measures. The presence of major technology and cyber security firms also contributes to the market's growth. Additionally, concerns about physical security, such as mass shootings and public safety, drive spending on surveillance systems and access control technologies.
• Europe: Europe is the second-largest market for security spending, accounting for a share of over 30% in 2022. Europe is another prominent player in the security spending market, with countries like the U.K., Germany, and France investing significantly in security solutions. The European Union's General Data Protection Regulation (GDPR) has driven increased attention to data privacy and security compliance. European organizations are focusing on enhancing cyber security, especially in industries like finance, healthcare, and critical infrastructure. Additionally, geopolitical factors and the potential impact of cyber-attacks on critical services have led to increased investments in both digital and physical security measures.
• Asia-Pacific: Asia Pacific is the fastest-growing market for security spending, accounting for a share of over 25% in 2022. The Asia-Pacific region is witnessing rapid growth in security spending due to its expanding digital footprint, economic development, and increasing cyber threats. Countries like China, Japan, South Korea, and India are allocating resources to strengthen their cyber security posture and protect critical infrastructure. Rising internet penetration, mobile device adoption, and digital transactions create new avenues for cybercriminals, prompting governments and businesses to invest in advanced threat prevention, detection, and incident response capabilities. The region also faces physical security challenges due to its diverse geopolitical landscape, driving demand for surveillance systems and access control solutions.

Figure 1. Global Security Spending Market Share (%), By Region, 2023

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Analyst Viewpoint:

The security spending market is expected to experience robust growth over the next five years. Driven by rising concerns over cyber security threats, stringent government regulations around data protection, and escalating geopolitical tensions. The need to safeguard critical infrastructure from digital assaults will prompt nations and enterprises to substantially ramp up investments into advanced security technologies. New frontiers in IoT (Internet Of Things) and 5G rollout may introduce fresh vulnerabilities that require active monitoring and resilient defenses. However, budget constraints in certain sectors could hamper ubiquitous security upgrades.

North America will likely retain its dominance due to large defense outlays and a flourishing ecosystem of security firms. But the Asia Pacific region is predicted to emerge as the fastest growing regional market, led by countries like China, India, and Japan. Heightened risks of cyber-espionage and data theft targeting governments as well as businesses will motivate significant security expenditures across the Asia Pacific. Solutions around physical access control, video surveillance, and identity & access management are also gathering traction as urbanization accelerates.

Security Spending Market Drivers:

• Rising Cyber security Threats: The proliferation of cyber-attacks, data breaches, ransom ware, and other digital threats is a primary driver of security spending. Organizations recognize the potential financial, reputational, and operational damage caused by cyber incidents, prompting increased investments in robust cyber security measures to protect sensitive information and ensure business continuity. The Indian Computer Emergency Response Team recorded 1,16,000 cyber security incidents in the first half of 2022, urging enterprises and governments to adopt multi-layered protection measures. The pervasive digital risks will sustain large-scale security investments worldwide through 2025 and beyond.
• Digital Transformation: The widespread adoption of digital technologies and the integration of Internet of Things (IoT) devices into business operations create new entry points for cyber threats. As organizations digitize processes and expand their digital footprint, the need for strong cyber security measures becomes essential to mitigate vulnerabilities and secure interconnected systems. According to data from the United Nations Conference on Trade and Development (UNCTAD) on their 2021 report on the digital economy, there was a 50% increase in cyber incidents reported by companies globally between 2019 and 2020.
• Regulatory Compliance: Stringent data protection regulations, such as the European Union's General Data Protection Regulation (GDPR) and various data privacy laws worldwide, drive organizations to implement security measures to avoid hefty fines and legal consequences. Compliance requirements mandate the implementation of robust data security and privacy measures, spurring security spending. According to a report by the United Nations Conference on Trade and Development in 2021, governments worldwide reported a 50% rise in spending on cyber security due to the strengthening of regulations and the increasing number of cyberattacks during the COVID-19 pandemic.
• High-Profile Data Breaches: Publicized data breaches involving well-known companies have heightened awareness about the potential impacts of security breaches on brand reputation and customer trust. To prevent such incidents and their associated consequences, organizations allocate resources to enhance their cyber security posture and minimize the risk of data breaches. According to a report by the European Union Agency for Cyber Security in 2021, there was an 11% increase in the number of personal data breaches notified to EU Data Protection Authorities compared to 2020.

Security Spending Market Opportunities:

• Cyber security Solutions Innovation: The continuously evolving nature of cyber threats creates an opportunity for the development of innovative cyber security Companies that can offer cutting-edge technologies such as advanced threat detection, behavioral analytics, and zero-trust architecture will find a receptive market looking for solutions that can effectively counter sophisticated cyber-attacks. According to a report by the United Nations Office on Drugs and Crime, cybercrime saw an unprecedented rise during the COVID-19 pandemic, with cases increasing by over 600% from 2019 to 2021.
• Cloud Security: As organizations increasingly migrate their operations to the cloud, there is a need for robust cloud security solutions. Companies can seize this opportunity by providing tools that ensure data privacy, secure cloud infrastructure, and protect against unauthorized access or data breaches in cloud environments. According to statistics from the United Nations Conference on Trade and Development report published in 2022, approximately 80% of large companies surveyed indicated utilizing cloud-based computing services such as infrastructure as a service (IAAS), software as a service (SAAS) or platform as a service (PAAS).
• Managed Security Services: The complexity of modern security challenges prompts many organizations to seek external expertise. Managed security service providers (MSSPs) have an opportunity to offer comprehensive security services, including threat monitoring, incident response, and security audits, to organizations looking to enhance their security posture without the burden of managing it in-house. According to data from the United Nations Conference on Trade and Development (UNCTAD), there was a significant rise of 37% in cyber incidents reported by companies globally between 2018 and 2020.
• Endpoint Security: With the proliferation of remote work and mobile devices, there is an opportunity to develop and provide advanced endpoint security solutions. These solutions can protect devices and data from threats originating from endpoints, ensuring a secure computing environment regardless of location. According to data from the United Nations Conference on Trade and Development (UNCTAD), there was nearly a 100% rise in cyber incidents targeted at individuals and home networks in 2021 compared to the pre-pandemic levels in 2019.

Security Spending Market Trends:

• Rise in Ransom ware and Extortion Attacks: Ransom ware attacks have surged in frequency and sophistication, targeting organizations across sectors. Cybercriminals increasingly demand higher ransoms and threaten to publish sensitive data if payment is not made. This trend underscores the importance of robust cyber security measures and incident response plans to mitigate the impact of such attacks. According to statistics from the U.S. Federal Bureau of Investigation (FBI), ransom ware attacks increased by more than 150% in 2021 when compared to the previous year, with tens of thousands of victims reported. The FBI's Internet Crime Complaint Center also received over 1,000 complaints per day related to phishing and extortion scams in 2021.
• Zero Trust Architecture Adoption: Organizations are embracing the concept of zero trust architecture, which assumes that no user or device should be trusted by default, even within the internal network. This trend is driving investments in identity and access management (IAM), multi-factor authentication (MFA), and micro-segmentation to bolster security in an increasingly perimeter less environment. A survey by the Federal Bureau of Investigation found that 95% of the responding organizations in the U.S. had adopted or were in the process of adopting zero trust principles in the aftermath of significant ransom ware attacks on critical infrastructure in 2021.
• AI and Machine Learning in Security: AI and machine learning are being integrated into security solutions to enhance threat detection and response capabilities. These technologies enable the analysis of vast amounts of data to identify patterns, anomalies, and potential threats, enabling faster and more accurate threat mitigation. According to the U.K. government report "National Cyber Strategy 2022-2026", around US$ 2.60 Billion will be invested over the next few years in developing AI and quantum computing capabilities specifically for cyber defense.
• Securing Remote Work Environments: The shift to remote and hybrid work models due to the global pandemic has accelerated the need for secure remote access and endpoint protection. Organizations are investing in solutions that ensure data privacy, secure communication, and threat detection for remote employees. The Verizon 2022 Data Breach Investigations Report noted that 27% of data breaches in 2021 involved human elements such as employee negligence.

Security Spending Market Restraints:

• Budget Constraints: Limited budgets can pose a significant challenge for organizations seeking to invest in comprehensive security solutions. Allocating sufficient funds to cover the cost of advanced security technologies, skilled personnel, and ongoing maintenance can be difficult, particularly for smaller businesses. Budget constraints can also incentivize organizations to look for more efficient security management practices or consider outsourcing to managed security service providers. According to the United Nations Population Fund, between 2015 and 2020, the population of working age people in developed nations declined by 16.6 million. Unless more local workers are trained, this labor crunch will impact timelines and budgets of fit out projects.
• Complexity of Threat Landscape: The rapidly evolving threat landscape makes it challenging to stay ahead of emerging cyber threats and attacks. Organizations may struggle to identify and prioritize the most relevant and immediate threats, which can impact the effectiveness of their security investments. The complexity of the threat landscape involves a wide array of risks that are increasingly interconnected, such as cyber-physical threats, where a cyber-breach can lead to physical consequences. As per the FBI's 2021 Internet Crime Report, reported losses due to cybercrimes in the U.S. rose to over US$6.90 billion in 2021, a 70% jump from 2020 levels.
• Lack of Skilled Cyber security Professionals: There is a shortage of skilled cyber security professionals capable of managing and implementing advanced security solutions. The demand for cyber security experts often exceeds supply, making it difficult for organizations to build and maintain effective security teams. The dearth of skilled cyber security professionals is a significant challenge that can hamper the effectiveness of cyber security investments. Despite the burgeoning security market, the gap in expertise means that even extensive budgets may not translate into improved security postures. According to data published by the Information Systems Audit and Control Association (ISACA) in 2022, there is a global shortage of over 2 million cyber security professionals currently.

Recent Developments

New product launches

• In 2021, Fortinet (a cyber-security company that develops and sells security solutions like firewalls, endpoint security, and intrusion detection systems) launched its new FortiGuard Labs Threat Intelligence Cloud, which provides organizations with access to real-time threat intelligence. The Threat Intelligence Cloud helps organizations identify and respond to threats more quickly.
• In 2020, Cisco Systems (which provides information technology and networking services) launched its new SecureX platform, which is designed to simplify and automate security operations. SecureX integrates Cisco's security products and services into a single platform, making it easier for organizations to manage their security posture.

Acquisition and partnerships

• In February 2023, Cisco Systems acquired SecureWorks, a provider of threat intelligence and security services. The acquisition will help Cisco expand its security offerings and provide customers with a more comprehensive view of their security posture.
• In January 2023, Palo Alto Networks (which offers an enterprise cyber security platform that provides network security, cloud security, endpoint protection, and various cloud-delivered security) acquired Demisto, a provider of SOAR software. The acquisition will help Palo Alto Networks to expand its SOAR offerings and provide customers with a more automated and integrated security solution.
• In 2022, Check Point Software Technologies (an American-Israeli multinational provider of software and combined hardware and software products for IT security, including network security, endpoint security, cloud security, mobile security, data security and security management) acquired Hyper proof, a provider of cloud security posture management (CSPM) software. The acquisition will help Check Point to expand its CSPM offerings and provide customers with a more comprehensive view of their cloud security posture.

Figure 2. Global Security Spending Market Share (%), by Security Spending Types, 2023

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Top companies in Security Spending Market

• Cisco Systems
• Palo Alto Networks
• IBM Security
• Check Point Software Technologies
• Symantec
• Fortinet
• McAfee
• Trend Micro
• CrowdStrike
• Proofpoint
• FireEye
• Darktrace
• Splunk
• RSA Security
• Akamai Technologies

Definition: Security spending refers to the financial investment made by individuals, organizations, and governments to procure and implement various measures, technologies, and services aimed at safeguarding digital assets, information, physical infrastructure, and personnel from cyber threats, data breaches, unauthorized access, and other security risks.