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17th April 2024 Issue no. 701

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Cyber security spending will reach $60bn

The figure is expected to be reached as businesses across the globe look to protect themselves from ever-increasing online threats, according to a study from consultancy PwC.

The company said in its Security Mergers and Acquisitions report that increased demand for enterprise security products will push the value of security firms up and could lead to larger, more lucrative merger deals in the coming years.

The value of security mergers and acquisitions has passed $22bn since 2008, and the first half of 2011 accounted for 37 deals with a combined value of £10bn alone.

The report reveals that the UK is the world's third largest market for security spending, behind the US and Japan. Overall, PwC estimates that businesses spent some $60bn on security products and services last year.

PwC believes that spending will continue to increase, growing at an annual rate of 10 per cent over the next three to five years.

Among the biggest drivers for the increase in spending is the rise in high-profile data breaches and attacks. Incidents such as the LulzSec and Anonymous AntiSec hacking campaigns have forced many executives to take a closer look at their security infrastructure.

Barry Jaber, report author and PWC's security industry leader, told V3 that new risks are driving increased demand from all areas of the public and private sectors and that 2012 could be a good year for security vendors as a result.

"There's a range of new threats appearing all the time that is driving demand for security services, and this is really changing the market, with SMBs now making the need for security far more of a priority than before," he said.

"In the public sector, the US government in particular has always had a large spend on defence and security contracts, while the UK is also increasing its budgets for security."

Jaber also noted that the increasing value of mergers and acquisitions underlines a strong desire for large IT vendors to purchase security companies.
"Some of the deals we've seen in the past years have seen firms paying up to three or four times the revenue value of a firm, underlining the desire for large firms to purchase dedicated security firms," he said.

The Ministry of Defence's cyber defence chief, Jonathan Shaw, warned on Tuesday that the UK needs to improve its "cyber hygiene", as the government steps up efforts to highlight the threats posed by cyber criminals.

7th December 2011