New Regulations Impact EMEA Cybersecurity Market in 2016, IHS Says
May 12, 2016
As a result of Europe’s General Data Protection Regulation (GDPR) in 2016, revenue from encryption products and managed services will to grow most quickly
ENGLEWOOD, Colo. (May 9, 2016) The cybersecurity product market in Europe, Middle East and Africa (EMEA) is expected to grow at a compound annual growth rate (CAGR) of 7.2 percent, from $11.2 billion in 2015 to $15.9 billion in 2020. Because the new General Data Protection Regulation (GDPR) in the European Union (EU) is likely to be formally adopted this year, revenue from encryption products is expected to grow most quickly, at a CAGR of 8.8 percent from 2015 to 2020, according to IHS Inc. (NYSE: IHS), the leading global source of critical information and insight.
“GDPR is a game changer for European data privacy regulation for two important reasons: greater transparency and greater accountability,” said Christoforos Papachristou, Critical Communications and Cybersecurity Analyst for IHS Technology. “The most significant change from the current data protection framework is that it is in the form of a regulation rather than a directive, which means it will be directly applicable within the member states as the national law of each country.”
According to the latest information from the IHS Cybersecurity Report , the U.K. is by far the biggest cybersecurity market within Europe, followed by France and Germany. The largest markets for cybersecurity products in the U.K. and France are defense and intelligence and security, while in Germany it is industrial utilities. “These new EU regulations will provide strong support to a growing market for data security, risk assessment and compliance,” Papachristou said.
Merger and acquisition activity in the European cybersecurity industry will continue to rise in the next five years, because of fragmentation of supply to the market and the attractive outlook for growth. “Technology firms are planning acquisitions to differentiate themselves from competitors and make their portfolios broader,” Papachristou said. “Defense companies, in particular, will continue along this path, as they have found a quickly growing market giving them the opportunity to diversify their client base and make up for shrinking defense budgets.”
The defense, intelligence and security market sector in EMEA will increase from $6.4 billion in 2015 to $10.2 billion in 2020. “The increased importance of defense companies in EMEA is one of the fundamental recent developments in the cybersecurity market’s competitive landscape,” Papachristou said. “However, there is an operational shift in government spending away from defense and towards security, as defense spending in Western Europe is comparatively low.”
Managed Security Services in EMEA
Managed security services, the second-largest cybersecurity sector after products in EMEA, is forecast to grow at a CAGR of 8 percent, growing from $9.2 billion in 2015 to $14.2 billion in 2020. Threat mitigation managed services revenue is expected to account for 55 percent of this market in 2020.
“New EU regulations will give strong support to a growing market for data security, risk assessment and compliance,” Papachristou said. “They will also give a big push to the markets in healthcare, banking and finance, and industrial utilities sectors. For healthcare and financial services, customer information is the most precious commodity, so, encryption, management and information classification will continue to play a central role in these sectors.”
The IHS Cybersecurity Report covers global and regional markets for cybersecurity hardware, software and services
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