Cybersecurity: 3 elements driving demand

Cybersecurity is a response to a strong need to protect our systems, IPs, reputation, and overall business. Global Cybercrime damage cost is projected to grow mid-teens in percentage annually and may exceed 10 trillion USD by 2025. In other words, if measured as a country it would be the third largest economy globally.

We see 3 major secular growth drivers for cybersecurity:

1.    Rapidly growing security budgets, and overall surging demand globally

Cloud security could outpace system infrastructure software spending within IT budgets in the coming years as focus within budgets turns towards reputational and business risks.

Security budgets are expected to grow 14% year over year in 2024 and should increase over time as firms seek to leverage generative artificial intelligence (AI) to minimize cyber security risks and protect their intellectual property.

2.    Fairly fragmented market, room to consolidate market shares.

With the cybersecurity market currently split by many companies, there is significant room for a few companies to consolidate the industry over the next several years at least.

3.   Regulatory tailwinds should also add support for the sector

Here are some examples of supportive regulation : 

• The US Cybersecurity and Infrastructure Security Agency has published draft rules in March 2024 for reporting of cyberattacks by critical infrastructure firms
• The SEC has required stricter cybersecurity disclosures for listed firms in US,
• The NIS2 directive in Europe which has wider cybersecurity legislation for member states.

In conclusion, the market for cybersecurity is booming but we may just be in the early innings of the cybersecurity industry as many players fight for dominance. In that sense, cybersecurity expertise should be an essential part of exploiting market opportunities and to proactively pick those listed companies that will emerge as winners over the long term.

This article is brought to you by the Advisory Solutions Team.