India Cyber Security Market Report – 2020: Ken Research

The cyber security market in the country has been immensely driven by the growing digitization of data in the business sphere and compliance led demand for security solutions in small and medium sized businesses. In FY’2015, the cyber security market in India clocked revenue worth INR ~ billion which increased by ~% from INR ~ billion in FY’2014. The cyber security market has experienced a substantial growth in the last two years. There are several factors which have led to this growth such as rising online transactions, surge in commercial units in the country, increasing growth in the information technology and services sectors, sprout of start-ups across industries and stringent regulations in the BFSI domain. Additionally, campaigns like “Digital India” and smart city development has positioned the market with a great potential of ~% in FY’2010 to ~% in FY’2015. The establishment of MNCs in metropolitan cities in the country has metropolitan cities in the country has

also impelled the sales of security solutions, thereby aiding the overall market growth in the last few years. The network security segment has garnered ~% of the market revenues as observed in FY’2015 which is relatively higher than the global average spend on the same segment. Over ~% of the expenditure on security services was incurred on security consultancy and around ~% of the revenues came from design and implementation of security solutions at workplaces in FY’2015. In FY’2015, deployment of Identity and Access Management in corporate, commercial and government spaces accounted for a share of ~% in the overall revenue generation from deployment of all sorts of security solutions. Revenue generation from deployment of basic security solutions like Firewall, IPS, IDS, Antivirus and Web Filtering combinedly stood at INR ~ billion. Notably, the government sector accounted for ~% of the overall spends on procuring security solutions.

• How Cyber Security Market Has Performed? The overall deployment of security solutions through system integrators and other

online and offline sales of security components along with expenditure on security services in India generated revenues of INR ~ billion in FY’2015 and represented a CAGR of ~% during the period, FY’2010-FY’2015. Companies such as Symantec, McAfee, IBM, Wipro, Cisco and Trend Micro among others have grabbed significant positioning in the domestic cyber security market. The domestic landscape is very fragmented in the country with presence of many small players who occupy regional markets. However, tech start-ups like ParaBlu and Data Resolve Technologies are gradually creating a niche for themselves with through offerings of specially designed security suites for small and mid-sized businesses. Most of these start-ups focus on cloud security offerings that are expected to carve a decent proportion of the overall market as organizations tend to move away from the “on-premise” model.

In order to cater to the mounting demand of security solutions by the growing number of small and midsized organizations and rise of small domestic vendors, the competition amongst the established vendors has intensified in the recent past. There has been a sea change in the organizational attitude towards security implementation in the wake of rising cyber attacks in the country in the past few years. Organizations have been allotting comparatively higher proportion of its budget towards threat elimination than in the past. The government has been more proactive about cyber security than it has ever been. Organizations have been directed to appoint dedicated Chief Information Security Officers (CISO) who will look for ways to tackle threat points and manage cyber risk of the organization. As far as banking sector is concerned, RBI mandate has obligated banks in India to set up steering committees on information security and appoint Chief Information Officers (CIOs). Notably, government has laid about INR 100 crore and the Indian Computer Emergency Response Team (ICERT) had selected vendors to set up botnet cleaning and malware analysis centre in the country.

• Which Segments Have Driven Changes In Cyber Security Market?Implementation of endpoint security generated ~% of the overall revenue in the cyber

security market in India, as recorded in FY’2015. Revenue generated through integration of application security envisaged the third highest share amongst different types of security expenditure as attackers have grown keen towards targeting sensitive data stored in the application. In the segregation by revenue generated from deployment of different solutions, data security segment comprising DLP, DLM and DRM solutions has recorded expenditure worth INR ~ Billion which translated to a share of ~% in the cyber security domain during FY’2015.

Growth of big data, mobile and hybrid cloud has broadened the security concerns. Therefore, data security has been the prime agenda in large and small organizations. With higher complex and sophisticated threats that have subjugated the market, consulting services has been given utmost preference by the commercial sector in India. Consultation budgets are expected to enlarge with the advent of SMACT (Social, Mobile, Analytics, Cloud and Things) in India Inc. Consulting services carved out a market share of ~% during FY’2015 that amounted to INR ~ billion.

High volume of complex and data laden transactions, increasing digitization of financial transactions and lack of awareness among end customers has made BFSI sector the leading contender for security breaches. Among the major cities, Bangalore generated around INR ~ billion in implementing security measures that helped it to envisage a market share of ~% in FY’2015.The large businesses with their large infrastructure and network dominated the demand break up for cyber security. Major enterprises in India produced around ~% of the total market revenue in FY’2015 which amounted to INR ~ billion.

• It is still going to take more time before the Indian market accepts the high dividends of a hosted deployment of security services. Expenditure on hosted deployment stood at INR ~ billion in FY’2015.

• Renewals generated INR ~ billion and the remaining INR ~ billion came in account of new orders in the market segregation by orders.

• What Is The Decision Making Process Of Hiring A Cyber Security Vendor

A cyber security vendor generally has more access to the company data than its own employees. Therefore, selection of a right vendor is a real brain-storming process and requires proper judgment on the side of the company management. The major parameters considered while deciding upon a vendor are the depth of knowledge and level of expertise the employees possess, the threat detection methodology applied by the company and the experience of working at the level of security that the business operates.

Generally, the Chief Information Security Officers (CISOs) have the responsibility to appoint a cyber security company. However, in case of small companies, the IT team has major take on whom to approach for a lead. As far as the government sector in India is concerned, it still suffers from lack of knowledge in the concerned field and mostly outsources the job. India witnessed a significant reluctance in the government affairs as far as security issues are concerned. At the final stage, for small offices, the manager conducts telephonic conversations with 4-5 companies after reading their reviews and judging them on the basis of the clients they have served.

In case of large companies, in the final stage, after the meeting with the CISO, a final company is decided after checking with NASSCOM. Papers and the final contract are signed by the director who can influence the decision of the CISO.

• What Has Been The Margin For Various Stakeholders Of The Value Chain In The Cyber Security Market

The key components in the value chain of a cyber security product or service are the consultants, the Original Equipment Manufacturer (OEM), the dealers and resellers and finally the receiving organization. Most of the time, OEMs are the final vendors and in some cases some vendors have tie-ups with these OEMs. The vendors integrate their product and services with the product of these OEMs and deliver a further enhanced software/hardware. Generally, an established vendor has a well mechanized supply channel.

There are clusters of distributors or trusted channel partners to distribute the product across the strata. These distributors are then further bifurcated into resellers who are in direct contact with the customers. Generally, the distributor cuts out a margin of around ~% through sales to the resellers. At the next level, the reseller puts up a margin of around ~% towards sales to the end customers. At the final stage, a business manager from the vendor side does a Presentation on Client (PoC) site and pitches his product arguing the USPs and other competitive advantages that is there for offering. After the finalization of the deal, there is a basic pre deployment followed by documentation and signing of the contract. The resources are then sent to the organization followed by cases of resource augmentation.

• What Role Does Security Consultants And System Integrators Play In The Cyber Security Market In INDIA

A system integrator is involved in several procedures, from selling the product to providing after sale services. It usually procures the desired cyber security products from a manufacturer. After procuring, the system integrating company adds its margin and supplies the products to the client. Quotations are different depending on the client. The market for cyber security systems integration in India has been highly fragmented with the presence of both organized as well as number of small unorganized players over the period FY’2010-FY’2015. Major organized system integrators generally deal with large projects and their average ticket size is INR ~ Crore.

Major system integrators such as Orion, Softel and Cyber Security Integrators have nationwide presence and generate huge revenues through repeat business as they have established their names in the industry. The role of security consultants initiates with assessing the security needs of clients and presenting the findings (based upon the needs) to the client. The service consultant during this process ensures to maintain quality and service benchmark that has been promised. The service consultants in the next stage formulate a security plan, once the client analyzes the findings submitted by consultant.

Some of the major sectors which are catered by these companies are IT/ITeS, BFSI, Retail, Hotel and Hospitality, Export Oriented Units, Industrial and Manufacturing, Educational Institutes, Multiplexes and Cineplex and Residential townships.

• What Has Been The Demand For DLP Solutions And Which Brands Had The Highest Share?

It has been witnessed that protection of data gets very difficult, if the company is dealing with big data, hybrid cloud and mobile data. Data loss and downtime accounted in average annual loss of USD 54 billion for businesses in India. Rapid investment in data security has led India surge ahead in data loss protection market. The DLP market in India grew at a CAGR of approximately ~% from FY’2010 to FY’2015 to touch INR ~ billion in FY’2015.Apart from attacks and compliance led demand, growth in cloud computing, and DLP being sold as a managed service has been the major driving force in the Indian market.

Endpoint DLP has been in demand in recent years because of rising content at endpoints and prevention of breaches through end points. Symantec has been one of the key players in the market and provides data loss prevention to the cloud and across all high-risk data loss channels. It had around ~% of the market share in India in FY’2015.

• How Is The DLP Market Valued In The Future?India DLP market is poised to have a magnificent growth over the period FY’2015-

FY’2020. Most of the companies are allowing employees to bring their own systems and others provide their own company devices. Also significant rise in mobile phones for work purposes in the coming years will lead to creation of DLP for mobile that will be a market on its own. The Indian DLP market has been valued at INR ~ billion in FY’2015 and is expected to accomplish a CAGR of ~% till the year ending FY’2020.

Standards such as Payment Card Industry Data Security Standard (PCI-DSS) and Sarbanes-Oxley Act (SOX) will require enterprises a decent amount of compliance. Compliance based demand will accelerate the DLP market at a pace of around ~% and ~% in FY’2017 and FY’2018 respectively and the market is estimated to touch the figure of INR ~ billion by FY’2018. The market is expected to be valued at around INR ~ billion by FY’2020 on account of tremendous rise in online data and growth of data driven small and medium businesses in the country.

• What Have Been The Trends For Antivirus And Antimalware Market In India? The antivirus market has witnessed a downward trend in India since 2013. The

antivirus market size in India was recorded at INR ~ billion in FY’2010. High segregation in customer needs and cut throat competition among vendors halted any possibility of price rise in the period FY’2013 and FY’2014. Additionally, slowing PC sales and user’s reluctance to pay for anti-virus products has resulted in the market growing at a pace of ~% and ~% in FY’13 and FY’14 respectively. Antivirus vendors are integrating their products with smart phones or investing in a subscription-based model in collaboration with telecom partners.The market saw a ~% spike in FY’15 against that of ~% in the previous period. The antivirus market stood at INR ~ billion in FY’2015.It is expected that declining prices of anti viruses and growing awareness about importance of original products will lead to a significant growth in the demand from the residential segment over the coming years. The business segment held a market share of ~% in FY’2015 whereas the home-user base accounted for ~% of the revenues.

Offline sales have dominated the Indian market by a huge margin during FY’2015. Around ~% of the revenue has been generated through offline sales in FY’2015. Internet security has been one of the most ignored areas among the Indian mass over the period FY’2010-FY’2015. Spending on internet security was recorded at INR ~ billion that amounted to ~% of the overall spend on antivirus products in FY’2015. The 1 PC installations have been followed by 3 PC in terms of revenue generation which accounted for ~% of the overall antivirus revenue in FY’2015.The market for anti-virus in India is gradually reaching its maturity stage. The market has not witnessed any significant change for quite some time now. The choice of having free antivirus software has reduced the revenue generating ability by a huge margin. The market is expected to grow at a slow CAGR of ~% in the period between FY’2015-FY’2020.

• How Is The Competition Structured In India Cyber Security Market?India has a range of vendors vying for a market share as the market is poised to grow

at the CAGR of at least ~% in the period between FY’2015-2020. Symantec’s end point security solutions are the most trusted and favored upon in the Indian market. The company cut out a market share of around ~% in terms of revenues in FY’2015 and is determined to further penetrate the market. The data security solution that includes DLP, DLM and DRM is the major revenue generator for the company. Currently McAfee has around ~% of the market share in the industry. It’s line of antivirus software products has a good standing in the industry as well as home user segment.IBM generates most of its revenues through its cloud services and Identity and Access management products. It had a market share of ~% in FY’2015.

• What Are The Future Prospects Of India Cyber Security Market?A host of malwares will be on rise in the near future in the Indian context. Malwares like Stuxnet,

Duqu, Flame, Uroburos/Snake, Blackshades and many others would make their way for network disruption. India will possess a lot of intellectual property by the end of 2018. With an exponential growth in FDI and MNCs eager to ride the digitization wave in India, there will be a lot to lose and therefore India will be a tempting target for cyber attacks. Over the period FY’2018, the security market is expected to grow at the rate of ~% to accumulate revenues worth INR ~ billion. Critical Infrastructure Protection in India would be needed in the coming years as India has launched projects like Digital India and Internet of Things (IoT). This will also invoke the market in the near future. The heightened rivalry because of cut throat competition in almost all the verticals will give rise to cyber espionage activities by the end of this decade. The push from government and corporate alike will foresee the market climb at a rate of ~% in FY’2020 to envisage a revenue figure of INR ~ billion.

• Source: https://www.kenresearch.com/defense-and-security/security-devices/india-cyber-security-report/12910-16.html

• Contact: Ken ResearchAnkur Gupta, Head Marketing & CommunicationsAnkur@kenresearch.com+91-9015378249

• Website : www.kenresearch.com

Thank you