Managed Security Services Market in APAC to grow over 21% till 2023

The Asia-Pacific is the fastest growing among all regions in the Managed Security Services Market clocking a healthy CAGR of 21.1% in the forecast period(2018-2023).

The market size is set to significantly grow from USD 4.2 Billion in 2018 to USD 10.2 Billion in 2023.

Definition / Scope
Market Overview
Market Risks
Top Market Opportunities
Market Trends
Industry Challenges
Technology Trends
Pricing Trends
Regulatory Trends
Other Key Market Trends
Market Size and Forecast
Market Outlook
Distribution Chain Analysis
Competitive Landscape
Competitive Factors
Key Market Players
Strategic Conclusion
References
Appendix

Definition / Scope

Managed Security Services is a systematic approach to manage an Organization’s security needs. These services maybe conducted in-house or outsourced to a service provider that supervises other companies network and information system security.

Managed Security Services are network security services that have been outsourced to a service provider. A company providing such a service is called Managed Security Services Provider (MSSP).

The early MSSPs are the Internet Service Providers (ISPs) in the mid-late 1990s. Initially ISPs sold customers a firewall appliance as Customer Premises Equipment and for an additional fee that would manage the customer owned firewall over a dial-up connection.

Businesses opt for Managed Security services to eliminate the issues they face daily related to information security such as targeted malware, customer data theft, skills shortages and resource constraints.

There are readily available products from a number of vendors to help organize and guide the procedures involved. This alleviate the burden of performing the tasks manually.

The global Managed Security Services market size was USD 20.81 Billion in 2017 and is expected to reach USD 47.65 Billion by 2023, growing at a Compound Annual Growth Rate (CAGR) of 14.7% during the forecast period. The base year considered for this study is 2018, and the forecast period is 2018–2023.

The current market size of the Asia-Pacific Managed Security Services market is USD 4.2 Billion in 2018 and it is expected to be growing to USD 10.2 Billion in 2023 growing at a healthy CAGR of 21.1%.

Functions of Managed Security Service

Monitoring and management of intrusion detection systems and firewalls,
Overseeing patch management and upgrades,
Performing security assessments and security audits and
Responding to emergencies

Categories of Managed Security Service

On-site consulting

On-consulting is a means of consulting which provides customized assessments on business risks, identifying key business requirements for security and framing of security policies and processes. It also includes assessments of security architecture and design including technology, business risks, technical risks and procedures.

This may also include security product integration and On-site mitigation support after the occurrence of an intrusion,including emergency incident response and forensic analysis.

Perimeter management of the client’s network

This service involves installing, upgrading, and managing the firewall, Virtual Private Network (VPN) and/or intrusion detection hardware and software, e-mail, and commonly performing configuration changes on behalf of the customer.

Management includes monitoring, maintaining the firewall’s traffic routing rules, and generating regular traffic and management reports to the customer. Intrusion detection management, either at the network level or at the individual host level, involves providing intrusion alerts to a customer, keeping up to date with new defenses against intrusion, and regularly reporting on intrusion attempts and activity.

Content filtering services may be provided by; such as, email filtering) and other data traffic filtering.

Product resale

This is not clearly a managed security service by itself,It serves as a major revenue generator for Managed Security Service Providers (MSSP). Product resale offers a number of value-added hardware and software for a variety of security-related tasks.Archival of Customer data is one such service.

Managed security monitoring

Managed security monitoring includes day-to-day monitoring activities and interpretation of major system events throughout the network including unauthorized behavior, malicious hacks, denial of service (DoS), anomalies, and trend analysis. It is the first step in an incident response process.

Penetration testing and vulnerability assessments

It includes one-time or periodic software scans or hacking attempts in order to detect the vulnerabilities within a technical and logical perimeter. It generally does not include assessment of security threat throughout the network, nor does it accurately reflect personnel-related exposures due to disgruntled employees, social engineering, etc.Reports are regularly generated and are provided to the clients.

Compliance monitoring

Compliance monitoring includes monitoring event logs for change management but not for checking intrusions. This service identifies modifications to a system that violate a formal security policy for example, if a rogue administrator grants himself or herself too much access to a system. In short, it measures compliance to a technical risk model.

Segmentation

Managed Security Services Market By Application

Based on the Application type MSS is classified into the following types:

Intrusion Prevention / Detection System
Distributed Denial of Services (DDoS)
Unified threat management
Secured information and event management (SIEM)
Firewall management
Endpoint Security
Others

Managed Security Services Market By Deployment Type

On the basis of Deployment type MSS market can be categorized into

Hosted and Cloud Based Managed Security Services
On-Premise or Customer Premise Equipment (CPE)

Managed Security Services Market By Organization Size

The Managed Security Services market based on the organization size is classified into

Small Medium Enterprises
Large Enterprises

Managed Security Services Market By Vertical

On the basis of Vertical Managed Security Services market can be classified into

BFSI
Healthcare
Manufacturing
Retail
Telecommunication & IT
Others

Market Overview

The Asia-Pacific region posted the highest growth among all regions by clocking a healthy CAGR of 21.1%.The market size of the Asia-Pacific Managed Security Services market is USD 4.2 Billion in 2018 and is expected to grow to USD 10.2 Billion by 2023.

Large enterprises with a market share of around 50% held the dominant position in 2018, based on organization size. Among the deployment type, the maximum CAGR would be witnessed in hosted and cloud based deployment during the forecast period (2018-2023).

Based on the application type, intrusion detection/Prevention system segment has dominated the Asia-Pacific managed security services market clocking a revenue of $1.4 Billion in 2018.

Endpoint Security would exhibit the maximum CAGR of 29.0% during the forecast period and hence, emerged as one of the promising application areas in managed security services market in Asia-Pacific.

with a market share of more than 30%, banking and financial sector has emerged as the dominating segment in the Asia-Pacific managed security services market by vertical type. Additionally, Healthcare sector would witness highest CAGR of 22.6% during the forecast period (2018-2023).

Market Risks

Sharing Private Information with third party Service Providers

The Primary risk associated with the adoption of Managed Security Services is the sharing of private information such as personal information, Medical records and Banking account information. The intentional or inadvertent release of private information may cause serious damage both to the customers and the Enterprises dealing with such information.

Lock-in with a single Service Provider

The outage of the services on the side of Managed Security Service Provider can cause serious lose of business and reputation. The solution to handle this situation is to conduct business with multiple providers but this comes with additional cost and management oversight responsibilities.

Access to clients Infrastructure

A client retains ownership and responsibility of the digital Infrastructure and the critical assets of the business. The risk comes in the form of inadvertent usage of client’s personal information. Emphasise must be laid on maintaining Information security.

Sharing of Resources

The shared operational environment offered by service providers to multiple clients pose mounting risks than an In-house environment Sharing a data transmission capability (such as a common network) or a processing environment (such as a general purpose server) across multiple clients can increase the likelihood of one organization having access to the sensitive information of another.

Steps to Mitigate Risks

Establishing a good working relationship and building trust between a client and service provider is critical in deciding whether to outsource security services.
A signed confidentiality agreement enacted in the later stages of contract negotiations can help mitigate the risk of inadvertent access of private information by the service provider.
outsource to multiple providers to avoid lock-in within a single service provider, but this comes with additional cost and management oversight responsibilities
Making information security the primary responsibility for one or more staff members and managers and conducting regular user security awareness and training sessions.
IT and business environments may require to adopt new interfaces, approaches, and expectations for service delivery.

Top Market Opportunities

Threat Intelligence sharing to counter advanced attacks

Malicious actors are getting organized and the attacks they make are becoming sophisticated. This makes the traditional defence methods and tools less effective.

The solution for this unsolvable problem comes in the form of sharing the threat intelligence for raising awareness and ring the alarm on new cyber-attacks and data breaches. Hence avoiding major security risks from recurring and prevent emerging threats from claiming more victims.

Increasing adoption of cloud services by SMEs

Due to their cost effectiveness and offering of cutting edge technologies at lower cost the SMEs prefer cloud based services and with the Managed Security Services offered by the cloud players makes the adoption of the same imminent.

Rising Demand for integrated and next-generation Security solutions and services

The ever growing forms of Digital economy such as micro-payments, p2p transfers, presentations creates higher demand for integrated solutions.

Due to the influx of commercial transactions entering the cyberspace, pseudo identities and other forms of identity (e.g. passwords, PIN numbers, identity cards etc.) have weakened considerably. As a result, the integration of digital identity has become extremely crucial.

Market Trends

Increasing cyber crimes to aim an enterprise network

With the increase in complexity of Cyber attacks aimed at the Enterprises, there is an alarming need for the adoption of managed security services by the Enterprises irrespective of their size either Large or Small and Medium.

Growing regulatory obedience and data security laws

The Stringent norms on both Organizational and Individual data security and privacy, of the regional Governments of Asia-Pacific and the rising investments from the respective Governments of the Asia-Pacific region on Data Privacy and Security has created a need for opt-in of Managed Security Services.

For Instance the Government of India has enforced Data Protection Law and Personal Protection Bill in the year 2018 and the Government of Singapore introduced a Cyber Security law in the year 2017. These laws strictly enforce the data privacy and security of Individuals and Organizations thereby emphasizing the need for adoption of Managed Security Services.

Security recruitment and budgeting constraint

The higher salary base of Security Professionals and the limited budgets of the Small and Medium Enterprises have enabled them to vie for contractual Managed Security services which significantly reduces the cost of spend on Security requirements of the Small and Medium Enterprises.

Rising Acceptance of Cloud based Services

The rise in the popularity of cloud based services has created Enterprises to opt for cloud based Security services,offered by the Managed Security Services Providers (MSSP).

Growing trend of BYOD among Enterprises

There is a rising trend of BYOD (Bring Your Own Device) among Enterprises thereby driving the demand for Managed Security Services

Cost effectiveness in implementing services

The cost cutting and cost effectiveness of cutting edge security solutions offered by the Managed Security Solutions Provider creates the demand for adopting MSS as preferred security solution irrespective of the size of the organisation but is popular among growing Small and Medium scale Enterprises (SMEs).

Deployment of in house SIEM by Enterprises

Security information and event management services offered at an high price by the Managed Security Service Provider creates the need for Deploying them in-house.

Threat of rising DDOS attack on cloud services

One of the challenges in cloud computing is providing secure and reliable services. Denial of Service (DoS) and Distributed Denial of Service (DDoS) attacks are the biggest threats in cloud security. DoS and DDoS attacks are initiated by the hacker to make an online service occupied by compromising it with massive traffic from multiple sources.

Lack of Trust on Third-party applications to share sensitive-data

The need to share sensitive-data such as personal information, Customer account details particularly in Banking and Financial Institutions sector and across all sectors is a restraint in the adoption of Managed Security Services

Industry Challenges

The Increasing Sophistication of Cyber attacks

The Cyber attacks are on the rise and are being cited as the major threat in the sectors of Banking and Financial institutions. The attacks are innovative and seem to be newly adopted strategies.

In order to counter the rising sophistication in the cyber attacks the Managed Security Services Providers must innovate on-par and sometimes even more with the attackers. The innovation must come from the technical side.

The complexity of tools needed to provide security

As the attacks are increasing in complexity so does the complexity of the tools that offer security services. The Managed Security Services Provider must innovate round the clock to provide security services to the customers.

Shortage of skilled labour

As Information Security is an evolving technology, there is an imminent need to train and educate Security Professionals on latest technologies and tools to counter the rising cyber attacks. There still exists a Shortage of skilled labour

Pressure to Comply with stringent regulations

The Pressure to handle and safeguard end-users personal information such as Medical report in the healthcare sector, Personal and Banking account information in the BFSI sector is mounting on the side of the Managed Security Services Provider and the stricter norms from the regional Governments of Asia-Pacific regarding Private data management and security is an additional challenge faced by the MSSPs.

Technology Trends

Network Behavioral Analysis

Network Behavioral Analysis is the process of detecting unknown threats hidden in client’s network and system. It is essential for detecting unknown threats. It investigates suspicious behavior and policy violations.

Predictive Analysis

This new trend is shining brightly in the market since it predicts about unknown future events. SIEM, identity access management, email security and encryption are becoming important aspects of cloud security.

Pricing Trends

The average cost for a MSSP (Managed Security Service Provider) is impacted by the size and complexity of the IT environment, number of geographic locations, and type of security services required.

In evaluating the cost for managed security services, many industry analyst’s point to the TCO (total cost of ownership). The TCO for security includes factoring the overall cost of internal security staff, infrastructure, compliance, and security incident and response.

On an average the starting cost for managed security services for a business with 15 IP’s is $750 per month.The pricing is in big differences among different Managed Security Services Providers.

The Following is the types of pricing strategies offered by the MSSPs

Break-Fix: Customer paying an hourly rate as issues occur
Responsive: Customer pre-purchases a block of hours
Proactive: Customer contracts out a checklist of preventative maintenance
Managed: Customer outsources IT as fixed fee or all you can eat
Utility: Customer pays based on usage

Regulatory Trends

The Governments of Asia-Pacific have laid stricter norms on the protection of data of both private persons or of an Organization.There is rising awareness about data privacy and security of private data among Governments and Enterprises.Regulation is developing in the region of Asia-Pacific but it is not uniform.The security measures are localized and are different,there arises a need for setting up harmonized standards.

Generally,businesses operating in countries that have more advanced ICT infrastructure and a bigger digital economy face greater cyber risks. For example, Korea, Australia, Japan and Singapore have been found to be nine times more vulnerable to cyber-attacks than other Asian economies.

Among the approaches to improve vigilance, facilitating information sharing is the core endeavor of new regulatory proposals. Authorities in the region are calling for increased information sharing amongst Enterprises

The Governments have enforced stricter regulations regarding data privacy and security. For instance,the Government of India has enforced Data Protection Law and Personal Protection Bill in the year 2018 and the Government of Singapore introduced a Cyber Security law in the year 2017.

These laws strictly enforce the data privacy and security of Individuals and Organizations thereby emphasizing the need for adoption of Managed Security Services.

The Security Framework to be adopted by the Governments of Asia-Pacific is as in the figure.

Other Key Market Trends

Stronger relationship with consulting and professional services is being required to understand the needs of the customer and deliver services accordingly
Advanced Threat Detection and Remediation is turning out to be a key Differentiator
Services are being integrated into Managed Services in the form of value-added services
Telecommunication providers with Managed security service offerings are leveraging their access, customers to develop new managed security service accounts
The strongest source for funding for managed security services comes from the need for compliance assistance.

Market Size and Forecast

The Asia-Pacific is the fastest growing region among all regions in the Managed Security Services Market.It is expected to grow at a healthy CAGR of 21.1% in the forecast period(2018-2023).
The Market size is estimated to be USD 4.2 Billion in 2018 and it is expected to grow consistently at a higher growth rate to a market size of USD 10.2 Billion in 2023
The Asia-Pacific region is expected to post the fastest growth driven by the adoption of advanced technologies such as mobility that could make the system vulnerable to cyber attacks.
The Governments of Asia-Pacific are enforcing stricter laws and are introducing stricter regulatory norms and standards for data privacy and security.This drives the demand for adoption of Managed Security Services.

China – The Leader

China is set to dominate the Managed Security Services market in the Asia-Pacific region clocking robust growth rate of 16.2% in the year 2018 holding market size of USD 1.8 Billion driven by rising demand in MSS adoption in the region, as more enterprises were looking for third-party experts to manage their security postures against the evolving threat landscape.

Japan – The Challenger

The Japanese MSS market grew by a healthy 14.8% in the year 2018. It was the second largest market in APAC holding market size of USD 1.2 Billion in 2018. The MSS market was driven by the increasing complicated and sophisticated cyber threats.

Japanese enterprises needed support from security specialists given by MSS providers. This was owing to the limited knowledge of in-house IT engineers or security analysts about the latest cyber threats.

Other important drivers included the changing Japanese enterprises’ investment trends. They preferred to invest in services instead of on-premise solutions. This investment trend will continue to drive the Japanese MSS market.

India – The Contender

The MSS market in India grew by 24.1% and holding market size of USD 800 Million in the year 2018. In 2018, the MSS segment continued to witness growth in the Indian market, owing to the increasing demand of cybersecurity solutions.

This was being driven by the government’s drive for digitization through its Digital India campaign. Furthermore, the National Payments Corporation of India (NPCI) aims to touch every Indian with electronic products by 2020. Sectors such as banking and finance, manufacturing, aviation, healthcare, and retail are increasingly adopting digital practices.

South Korea, Singapore, Malaysia – The Followers

The South Korean MSS market witnessed a growth of 9.5% and holding market size of USD 400 million in 2018. The market saw a high demand from cloud MSS and hybrid MSS. Amazon Web Service (AWS) did business in the South Korean market, with support from leading local participants SK Infosec and AhnLab.

As many customers are still using legacy solutions and not private cloud, the cloud MSS remains focused on public cloud such as AWS, Azure, Google, and IBM cloud, and these companies are trying to partner with cloud service providers.

To reduce costs and have a better understanding about security incidents, clients prefer to have MSS professionals in their security operations centres (SOCs).

Singapore managed security services market is projected to cross USD 600 million by 2023. With growing use of smart devices and rapid increase in cyberattacks, companies across the country are deploying managed security services to safeguard their sensitive data.

Booming Internet of Things market, rising number of government initiatives and emergence of mobile applications and Bring Your Own Device concept is expected to positively influence the country’s managed security services market over the coming years.

Moreover, the framing of new security legislation and mandates aimed at protecting and safeguarding sensitive data would aid the managed security services market in Singapore during the forecast period.

Malaysia is an emerging economy in the case of MSS market clocking a healthy growth rate of 16.2% and holding a market size of $230 Million in the year 2018.The market is driven by the increasing investments made by the Government of Malaysia in the digital economy of the country.

Market Outlook

The Managed Security Services market is expected to clock a healthy growth rate of 21.1% both in terms of value and volume.
Based on Organization size,Large enterprises with a market share of around 50% held the dominant position in 2018 and is expected to continue with its growing trend until 2023 and further.
Among the deployment type, the maximum CAGR would be witnessed in hosted and cloud based deployment during the forecast period (2018-2023).
with a market share of more than 30%, banking and financial sector has emerged as the dominating segment in the Asia-Pacific managed security services market by vertical type. Additionally, Healthcare sector would witness highest CAGR of 22.6% during the forecast period (2018-2023).

Distribution Chain Analysis

The Managed Security Services is offered by participants including Direct Managed Security Service Providers, Value-added re-sellers and online.

The Direct Security Services offered by the Managed Security Services Provider holds the major share of distribution of Managed Security Service. This is followed by the value-added re-sellers who offer services such as consulting, Professional and technical services. The Managed Security Service offered online is gaining ground and it is showing positive growth.

Competitive Landscape

Competitive Product Mapping

The offering of tools and services of higher quality encompassed with cutting-edge technologies that counter increasingly complex cyber attacks is an alarming need of the customers and they expect the same to be offered by the Managed Security Services Provider.

Market Positioning

The race for positioning of Market leader is gaining prominence among the Managed Security Services Provider, hence they offer differentiating products and services in the form of value-added service.The Service Provider that understands the need of the customer and offering solution for the same is expected to come out as the market leader.

Competitive Factors

Staying closer to the customer and Understanding the needs of the customer

Asia-Pacific Managed Security Services providers should not be sensitive to the hype in the news. Successful providers are the ones that stay closer to the customers, thereby identify the requirements and issues of the customers and providing solutions. Although not attractive the service providers that stay closer to the customers are the most successful.

Uniqueness

Threat and Incident Remediation is the growth sector, customers expect solutions that solves problem and not just add to the number of alerts to be addressed.The most successful Managed Security Services provider will with a unique solution attribution such as big data analytics or unique sensory data collection.

Value-added Services offered by the Managed Security Service Providers

The link between the Managed Security Services Providers and the consulting, Professional and Technical services is inevitable and imminent. Providing Consulting, Professional and Technical services is not a niche of the Managed Security Services Providers, unless the provider is to outshine the competition.

Key Market Players

The Key market players based on the market share in the Managed Security Services includes

HP has proven expertise on Security Monitoring.With the availability of resource with exceptional technical expertise. HP stands out as the Market Leader in Managed Security Services.
IBM Corporation IBM Managed Security Services offer the industry-leading tools, technology and expertise to help secure your information assets around the clock, often at a fraction of the cost of in-house security resources. IBM Security Operations Center Portal, a single window into the entire security world, is included in every managed security service subscriptions.
Dell SecureWorks is a United States-based subsidiary that provides information security services, protecting its customers’ computers, networks and information assets from malicious activity such as cyber-crime. The company has approximately 4,400 customers across 61 countries, ranging from Fortune 100 companies to mid-sized businesses in a variety of industries. It became part of Dell in February 2011 and branched off to become a public organization in April 2016. It is still majority-owned by Dell.
Symantec Corp is an American software company headquartered in Mountain View, California, United States. The company provides cyber-security software and services. Symantec is a Fortune 500 company and a member of the S&P 500 stock-market index. The company also has development centers in Pune, Chennai and Bengaluru (India).
Cisco Systems, Inc is an American multinational technology conglomerate headquartered in San Jose, California, in the center of Silicon Valley, that develops, manufactures and sells networking hardware, telecommunications equipment and other high-technology services and products.Through its numerous acquired subsidiaries, such as OpenDNS, WebEx, Jabber and Jasper, Cisco specializes into specific tech markets, such as Internet of Things (IoT), domain security and energy management.
Computer Science Corp was an American multinational corporation that provided information technology (IT) services and professional services. On April 3, 2017, it merged with the Enterprise Services line of business of HP Enterprise (formerly Electronic Data Systems) to create DXC Technology
Fortinet, Inc is an American multinational corporation headquartered in Sunnyvale, California. It develops and markets cybersecurity software and appliances and services, such as firewalls, anti-virus, intrusion prevention and endpoint security.
Check Point Software Technologies Ltd is an Israeli multinational provider of software and combined hardware and software products for IT security, including network security, endpoint security, mobile security, data security and security management.
AT&T is an American multinational conglomerate holding company headquartered at Whitacre Tower in Downtown Dallas, Texas. It is the world’s largest telecommunications company, the second largest provider of mobile telephone services, and the largest provider of fixed telephone services in the United States through AT&T Communications. Since June 14, 2018, it is also the parent company of mass media conglomerate WarnerMedia, making it the world’s largest media and entertainment company in terms of revenue.As of 2018, AT&T is ranked #9 on the Fortune 500 rankings of the largest United States corporations by total revenue.
BT Group is a British multinational telecommunications holding company headquartered in London, United Kingdom. It has operations in around 180 countries and is the largest provider of fixed-line, broadband and mobile services in the UK, and also provides subscription television and IT services.

Strategic Conclusion

The Asia-Pacific is the fastest growing in the market among all regions.This growth is driven by the adoption of advanced technologies such as mobility for micro-payments,P2P transfers and adoption of cloud based services, thereby increasing the vulnerability of cyber attacks.With the increasing complexities of cyber attacks in the form of targeted malware, ransomware and advanced attacks such as Petya, WannaCry the Managed Security Service Providers are expected to raise their game and counter the cyber attacks.
The Security measures adopted by the countries of Asia-Pacific is different and is localized, so there is a need for sharing threat information and creating Harmonized Standards of Security.
The Rising Sophistication of Cyber attacks,Threat of rising DDOS attack on cloud services and the need for sharing sensitive information with third-party service providers are the challenges being faced by the industry players.
The market is driven by factors such as enforcement of strict regulation from the respective Governments of the region of Asia-Pacific, need for recruiting highly paid Security professionals and Budgeting constraints of Small and Medium Enterprises (SMEs),Rising Acceptance of Cloud based Services,Growing trend of BYOD among Enterprises,Cost effectiveness of Services offered by Managed Security Services Provider which includes access to cutting-edge technologies.

Appendix

USD – US Dollar
MSSP – Managed Security Services Provider
MSS – Managed Security Services
IoT – Internet of Things
ISP – Internet Service Providers
CAGR – Compounded Annual Growth Rate
VPN – Virtual Private Network
DDOS – Distributed Denial of Services
SIEM – Secured information and event management
CPE – Customer Premise Equipment
BFSI – Banking and Financial Services Institutions
BYOD – Bring Your Own Device
TCO – Total Cost of Ownership

Managed Security Services Market in APAC to grow over 21% till 2023