Cybersecurity sector continues to grow despite imminent global recession – Verdict




The cybersecurity sector continues to show strong momentum, with economic growth slowing and inflation high. This is in contrast to the telecom sector as a whole where there has been a decline in product revenues of more than 9%.
The telecoms industry as a whole is giving out mixed messages on its growth potential with global recession looming, and one of the causes of this is the rate at which the economic downturn and high inflation are expected to impact the global economy. The sources of impact have been well documented, and include the global energy and food markets as a consequence of the Russian and Ukrainian war, tail off in the slow economic growth from the pandemic, and the high amount of debt within countries, influenced in part by monetary policies and unprecedented challenges that governments face globally.
The telecoms industry on paper shows promise, with total worldwide telecom revenues (mobile and fixed broadband services) expected to grow between 10-15%, but with lowering ARPU (Average Revenue Per User) by up to 5%. However, individual operators have reported total revenue decline numbers in their B2B segment of up to 10% compared to the previous year.
To add more complexity, the majority of providers are also in the realms of simplifying their portfolio, digitalizing their operations and customer interfaces to reduce OpEx and improve customer experiences in the modern enterprise digital setting – key trends here include enterprise digital transformation, the move to cloud-centric service delivery models, and divestments in regions that require more investment/effort and generate less profit. Within this backdrop, recent announcements over the last few months about the economy going further in the red will create further turmoil in the telecoms sector in the next two years and in companies failing in meeting their forecasted growth objectives.
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To answer the question why the cybersecurity sector is showing strong growth in the current climate, the answer is simple – global organizations are really struggling with the ever-increasing battle with cyber-attacks on their businesses. Cybersecurity vendors and service providers continue to be seen as the saviors to help businesses and governments experiencing exponential cyber attacks, by implementing effective cybersecurity defenses within their networks and IT environments.
Financially, this results in significant enterprise spending on cybersecurity, with some industry experts predicting spend above $160 billion in 2023, and increasing above $280 billion by 2026. Breaking this down further, transformation of enterprise technologies and implementation of security frameworks are fueling growth. This covers tighter end to end security in modern digital enterprises by embracing approaches like zero trust, an increase in hybrid working, and the convergence of network and cloud connectivity topologies.
But the proof is in the financial performance of these cybersecurity companies – Palo Alto, one of the leading cybersecurity companies just announced in November 2022 its fiscal first quarter 2023 results of $1.6 billion revenues, with a 25% year over year growth. Also, Cisco announced its first quarter 2023 revenues at $971 million, and its CEO Chuck Robbins stated in an analyst call that security is now Cisco’s top investment area. In summary, as the global economy moves forward in the next two years, GlobalData predicts that spending on security will maintain current levels with possible minor reduction due to the recession, influenced by an increase in cyber attacks and technology architecture changes within the enterprise. However, global enterprises will probably re-strategize and cut costs on technology spend and manpower. But more than likely a reduction in security spend will be substituted in other enterprise software areas.

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CyberTelugu

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