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IDC: 2019 security spending to grow 20% in APeJ

12 Apr 2019

According to the latest IDC Worldwide Semiannual Security Spending Guide, Asia/Pacific excluding Japan (APEJ) spending on security-related hardware, software, and services will reach US$16.0 billion in 2019, an increase of 20% over previous year. 

IDC expects investment on security-related products and services to grow at a five-year CAGR of 20.1% over the forecast period (2017-22) and reach US$28.2 billion by 2022.

“The Asia/Pacific region recognises that its no longer “under-the-radar” as far as breaches, hacks, and legislation is concerned,” says IDC Asia/Pacific security and blockchain research vice president Simon Piff. 

“For too long, business leaders were underinvesting in this category. We see this changing lately but a bit late to be able to find the needed skills in the market, hence the incremental growth expected in the services segment. Governments prioritising this as part of their agenda is good, but it could also be backed by better legislation in many markets.”

Security-related services will be both the largest ($6.5 billion in 2019) and the fastest growing (23.8% CAGR) category of APEJ security spending. 

Managed security services will be the largest segment within the services category, delivering more than 46% of the technology category throughout the forecast (2017-22). 

Security hardware is the second largest category with 36.2% share of the overall security spend in 2019. 

Network security hardware will be the largest hardware segment throughout the forecast period. 

Software spend accounts for 23.0% of the overall security spend in 2019 and is expected to grow at five-year CAGR of 12.2% during 2017-22 respectively.

Banking will make the largest investment in security solutions, increasing from $2.4 billion in 2019 to $4.2 billion in 2022. 

Primarily, this growth is led by managed security services and network security which accounts for more than half of the industry's spend throughout the forecast. With the rising pressure from the government and customers to combat threats aiming their own customer accounts and IT infrastructure in an everyday life has generated huge impetus in terms of security spending in the banking industry. 

Following this, Telecommunications and Federal/Central Government are the other two shaping industries, representing 23.2% share of the overall security spend in 2019. 

The industries that will see the fastest growth in security spending will be State/Local Government (23.7% CAGR) and Resource Industries (22.2% CAGR).

“We have observed that industries such as State Government, Resource, Utilities, Telecom and Transportation have the fastest in spending on security solutions as a result of the region’s growth of internet users, economic activity and increasing digitalization of businesses,” says Swati Chaturvedi, Senior Market Analyst at IDC Asia/Pacific. 

“All these changes can potentially create unforeseen implications hence governments and critical infrastructural agencies alike are putting in extra efforts and investments in the right security solutions to preserve data integrity and maintain strategic relevance.”

From a company size perspective, large and very large businesses (those with more than 500 employees) are expected to garner around two-thirds of all security-related spending in 2019. 

Small businesses (10-99 employees) will see the strongest spending growth of 21.0%, close to the growth of 20.9% in very large businesses (1000+ employees) during 2017-22. 

Small offices (1-9 employees) and medium-size businesses (100 to 499 employees) are expected to grow moderately with 19.3% and 18.3% CAGR respectively.

From a geographical perspective, China represents the largest security spending in the APEJ region with 43.2% share in 2019 and the country spending is projected to take off at a five-year CAGR of 24.9% during the forecast period (2017-22). 

Telecommunications and State/Local Government are the two leading drivers of the Chinese market for security-related solutions, collectively accounting to 35% share from overall China spend in 2019. 

Apart from China Industrial spend in APEJ will be led by strong demand in Australia and India.

The IDC 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 nine regions and 53 countries.