Terrorism threat to drive security outsourcing

The threat of terrorist attacks is creating a huge demand for managed security services, and not just for large businesses, according to Forrester Research
Written by Munir Kotadia, Contributor

IT spending went through the roof just before the millennium as companies upgraded their equipment to minimise possible disruption, and the threat of terrorist attack is now having a similar effect on spending in the IT security sector, according to research firm Forrester.

The emphasis on being prepared for a terrorist attack has resulted in security spending plans being given a higher priority. However, Forrester believes this is causing a shortage of specialist skills in the market and will drive more companies to choose an outsourced managed-security service.

Forrester expects that within five years, managed firewalls will make up 36 percent of the managed security market and account for 1.7bn euros in revenue. Managed intrusion-detection systems are predicted to grow at almost 50 percent a year, accounting for 32 percent of the market and generating 1.5bn euros (£1.05bn) in revenues by 2008. In the same time frame, the use of digital signatures is predicted to grow by more than 50 percent a year, resulting in a 1.1bn euro market.

Companies will be forced to outsource in order to cope with an increasingly volatile security environment, according to Forrester senior analyst Lars Godell. "Most large firms already have a firewall, but the lack of internal skills, high cost of internal management, and a more mature managed-service market will drive conversion to managed firewall services," he said in a statement.

The largest area of growth is going to come from smaller companies, which Forrester estimates make up more than 99 percent of the European market.

Forrester believes the big players -- like BT and EDS -- will fight it out for the large contracts that make up eight percent of the market. However, SMEs (small and medium enterprises) are an untapped opportunity, Forrester argues, which could generate 3bn euros in 2008 -- or around 66 percent of the managed security market.

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