Cyber Security Services Market Size, Share & Trends Analysis Report By Services (Pen Testing (Penetration Testing Services), Bug Bounty, Managed Detection Response (MDR)), By Industry Vertical (IT and Telecom, Retail, BFSI, Healthcare, Defense/Government, Energy, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2023-2031

Market Overview

The global cyber security services market was valued at USD 12.73 billion in 2022. It is estimated to reach USD 66.67 billion by 2031, growing at a CAGR of 20.2% during the forecast period (2023–2031). The rising adoption of mobile banking and smartphone-based payment applications and the growing preference for cyber security services to identify potential threats stimulate market growth. 

Cybersecurity services encompass professional solutions and expertise to safeguard computer systems, networks, data, and information from unauthorized access, cyber threats, and potential attacks. Cybersecurity experts or specialized firms typically provide these services to individuals, businesses, organizations, and government entities. One key type of cybersecurity service is vulnerability assessment. These services involve scanning and analyzing computer systems, networks, and applications to identify potential vulnerabilities and weaknesses that cybercriminals could exploit. By conducting vulnerability assessments, organizations can gain insights into their security posture and take appropriate measures to address any identified weaknesses.

Another essential cybersecurity service is penetration testing, also known as ethical hacking. Penetration testing simulates real-world attacks on computer systems, networks, or applications to identify security flaws and evaluate the effectiveness of existing security measures. By conducting penetration tests, organizations can proactively identify and address vulnerabilities before malicious actors can exploit them. Security audits are also a crucial cybersecurity service. They comprehensively evaluate an organization's information systems, policies, and procedures to assess their compliance with established security standards and identify improvement areas. Security audits help organizations maintain compliance, improve security measures, and ensure that their systems and practices align with industry best practices. In an increasingly interconnected and digital world, cybersecurity services are designed to provide protection, mitigate risks, and strengthen the security posture of individuals, businesses, organizations, and governments.

Market Dynamics

Global Market Drivers

Rising Adoption of Mobile Banking and Smartphone-Based Payment Applications

The spread of smartphones and the steady rollout of high-speed internet networks has triggered the adoption of mobile banking practices. Mobile banking helps reduce the crowds at banks and allows users to transact irrespective of location. According to a GSMA report, nearly 300 million individuals got connected for the first time to mobile internet in 2018, thereby taking the total global connected population to over 3.5 billion.

While mobile-based payment applications, such as Paytm, Apple Pay, Google Pay, and PayPal, among others, gained traction in line with the rising number of smartphone users, these applications also emerged as the major targets of hackers, thereby prompting banks offering online banking services and payment services companies to opt for cyber security services to find the identify loophole in the application and rectify to save the users from monetary losses.

Growing Preference for Cyber Security Services to Identify Potential Threat

Pen testing and bug bounty services rely largely on the white hat hackers' ability to detect a bug or launch attacks in a controlled environment to test for potential threats. Identifying the vulnerability helps developers eliminate errors, make applications reliable, and protect against recurring attacks. Although developers try to eliminate bugs during the development phase, the chances of human error cannot be removed completely. Hence, the need for bug bounty hunters arises, which the companies hire to report bugs, and the reward/ value is decided based on the threat level posed by the bug. Moreover, with the boom in tech-based devices powered by AI, machine learning, and IoT are susceptible to cyber-attacks and may damage the user monetarily or personally.

Moreover, various industries on regional and global levels are turning digital and are launching web-based applications to run their business, which opens them to potential cyber-attacks. The vendors offering a bug bounty platform often register a pool of white hat hackers that can identify bugs on enterprises' available programs. Hence, hackers' capability is a more crucial skill required by vendors to attract more enterprises to their platforms.

Global Market Restraints

Lack of Training and Shortage of Skills Workforce to Cope with Dynamic Cyber Security Trends

As cyberattacks become sophisticated, conventional cybersecurity services cannot detect the latest versions of ransomware, malware, and other sophisticated cyber threats. Hence, vendors of cybersecurity services are leveraging machine learning and AI technologies to make sure their cybersecurity services deal with sophisticated and critical threats and make them capable of responding to the evolving cyber threats confronted by businesses, governments, and individuals. However, organizations face an acute shortage of skilled workforce to cope with the cybersecurity trends. The looming lack of cybersecurity skills can be attributed to the continued technological advances and the rapid changes in the cyber threat landscape stemming from the proliferation of IoT, mobile technology, cloud computing, and data centers.

However, companies are drafting training curriculums, certifications, and courses and organizing webinars and other events to ensure a strong and skilled workforce capable of coping with the changing cybersecurity landscape. Governments are also working with the market incumbents to emphasize training and help cybersecurity professionals identify potential threats, improve awareness, and counter cyberattacks.

Global Market Opportunities

Growing Adoption of Managed Security Services

Managed security services (MSS) are gaining popularity as organizations recognize the need for robust cybersecurity measures to protect their sensitive data and critical infrastructure. One key advantage of MSS is cost-effectiveness. Putting together and keeping up an in-house security team and infrastructure can be a significant financial burden for organizations, especially small and medium-sized enterprises (SMEs). Managed security services offer a more affordable approach by leveraging economies of scale. MSS providers have the expertise, technology, and personnel to simultaneously monitor and protect multiple clients, resulting in cost savings for organizations.

Moreover, managed security service providers specialize in cybersecurity. They have dedicated teams of professionals who possess in-depth knowledge and experience in safeguarding against cyber threats. These experts stay updated with the latest trends, attack techniques, and security technologies, allowing them to provide proactive and effective security measures. By outsourcing their security needs to MSS providers, organizations gain access to higher expertise and specialized knowledge that may be challenging to maintain in-house.

Regional Analysis

North America Dominates the Global Market

Based on region, the global cyber security services market is bifurcated into North America, Europe, Asia-Pacific, Central and South America, and the Middle East and Africa.

North America is the most significant global cyber security services market shareholder and is estimated to grow at a CAGR of 19.4% over the forecast period. North America holds a significant share of the global cybersecurity services market and is expected to experience steady growth over the forecast period. The region's dominance can be attributed to several factors, including many cybersecurity service providers, advanced technological infrastructure, and high awareness of cyber threats among businesses and organizations.

North America has a robust ecosystem of cybersecurity companies, ranging from established industry leaders to innovative startups. These companies offer various cybersecurity services, catering to the diverse needs of organizations across various sectors. The availability of a competitive landscape with a strong focus on research and development contributes to the growth and innovation in the cybersecurity services market.

Europe is anticipated to exhibit a CAGR of 20.8% over the forecast period. The European region strives to follow the North American market closely regarding growth. The global market reached USD 2,086.6 million in 2020. This growth is attributed to the several countries proactively opting for pen testing, bug bounty, and MDR service to secure their IT infrastructures before and after the cyber incident and assess the underlying threat. Enterprises in European countries have been proactively opting for pen testing, bug bounty, and MDR services. Government initiatives to promote cybersecurity awareness in the region are also anticipated to drive cyber security services market growth. Recent evidence of this was when the CEU implemented the Cybersecurity Act in 2019, introducing a system of mandate certifications in the EU cyberspace.

As the Asia-Pacific has been continuously driving its trade relations with countries across the globe, the need for cyber security services has gained prominence in the region. With the increasing trade relations of Asian countries with countries worldwide, cybersecurity has become a matter of urgent consideration for the Asia-Pacific region. Efforts to ensure secure digital marketplaces and communities have increased regional government authorities' focus on implementing cybersecurity solutions. The Republic of Korea, Singapore, Japanese, and Australian governments have been frequent cyber-attack targets. Growing awareness about cybersecurity among small and medium organizations has led to an incline towards adopting pen testing and bug bounty security services to avoid security breaches due to existing bugs in the application. According to a new enterprise cybersecurity survey conducted by ESET North America, an average of one out of five business organizations in the Asia Pacific region have experienced more than six security breaches in the past two years.

Central and South America are emerging regions in the global cybersecurity services market, witnessing steady growth and increasing adoption of cybersecurity services. While North America still holds a significant share, Central and South America present their unique opportunities and dynamics in the cybersecurity landscape. In Central and South America, the growing digitization of businesses, government services, and critical infrastructure has increased awareness of cyber threats and the need for robust cybersecurity measures. Organizations in the region are increasingly investing in cybersecurity services to protect their systems, networks, and data from evolving cyber risks.

The Middle East and Africa region is witnessing significant growth in the cybersecurity services market due to various factors such as increasing digitization, rising cyber threats, regulatory initiatives, and the need for data protection. While the region is still developing regarding cybersecurity capabilities, there is a growing recognition of the importance of robust cybersecurity measures. In the Middle East and Africa region, the rapid digitization of industries, government services, and critical infrastructure has increased the risk of cyber threats. This has prompted organizations to invest in cybersecurity services to protect their networks, systems, and sensitive data from evolving cyber risks. The demand for services like vulnerability assessments, penetration testing, incident response, and threat intelligence is rising as organizations strive to enhance their security posture.

Segmental Analysis

The global cyber security services market is bifurcated into services and industry verticals.

Based on services, the global market is bifurcated into pen-testing (penetration testing services), bug bounty, and managed detection response (MDR). 

The pen-testing segment dominates the global market and is projected to exhibit a CAGR of 20.5% over the forecast period. Penetration testing services involve simulating real-world attacks on computer systems, networks, or applications to identify security flaws and evaluate the effectiveness of existing security measures. Organizations opt for pen-testing services to proactively assess their vulnerabilities, strengthen their security infrastructure, and address potential weaknesses before malicious actors exploit them.

Furthermore, the demand for pen-testing services is driven by the growing awareness of cybersecurity risks and the need to protect sensitive data and digital assets. The dominance of the pen-testing segment in the global cybersecurity services market is expected to persist due to the continuous evolution of cyber threats and the increasing emphasis on proactive security measures. As organizations recognize the importance of robust security testing and risk mitigation, they are more inclined to invest in penetration testing services. Additionally, regulatory requirements and compliance standards often necessitate regular penetration testing to ensure the security and integrity of systems and data.

Based on industry verticals, the global market is bifurcated into IT and telecom, retail, BFSI, healthcare, defense/government, energy, etc. 

The IT and telecom segment dominates the global market and is projected to exhibit a CAGR of 19.6% over the forecast period. Telecom organizations store personal user information, such as their name, address, and financial information. This sensitive data proves to be a compelling target for cyber attackers. Telecom companies are expected to increase their spending on cyber security solutions and services to protect sensitive data and avoid data losses. Furthermore, an increase in the sophistication of hackers leveraging technology is making it vital for telecom companies to stay abreast of the changing threat landscape. This is expected to increase the demand for services over the forecast period.

Recent Developments

• January 2023- Palo Alto Networks announced the acquisition of RedLock, a provider of cloud security posture management (CSPM) solutions.
• February 2023- IBM Security announced acquiring Randori, a managed risk awareness service provider.