Promise of growth
Solutions providers expect the economic slowdown to accelerate the adoption of managed security services
By Priyanka Chowdhury
 Despite the global economic crisis and the resulting slowdown, one segment that is expected to continue to grow is managed security services (MSS).
According to a recent report by researcher Frost & Sullivan (F&S), the MSS market in India has seen a CAGR of more than 80 percent between 2005 and 2007. MSS business in the country crossed $50 million in 2007 as compared to $27.4 million in 2006.
“The growth rates of the last couple of years clearly depict a shift toward a services-oriented model in the Indian information security market. Demand for MSS from large enterprises is growing fast as they continue to use high-end security management services,” states Neenu Kumar, Senior Research Analyst, ICT practice, F&S, South Asia and Middle East.
The early adopters of MSS have been the large enterprises in the BFSI, IT/ITES and service providers segments. “The drivers for adoption are several: the increasing sophistication of security threats, the need for regulatory compliance, the overwhelming volume and complexity of security infrastructure, and the cost savings that come from outsourcing security management,” Kumar explains.
Kumar believes that the receptiveness of the concept of MSS is also increasing among SMBs. “I expect investments in MSS by medium enterprises to grow much faster than other traditional security solutions in the near future, taking into account factors such as cost savings and lack of competent staff.”
This could spell big opportunities for solutions providers (SPs) catering to the SMB segment. Sensing this, many SPs and their vendors are working toward setting up their MSS offerings.
Says Manasi Saha, Director of the Kolkata-based Macaws Infotech, a company specializing in security solutions, “We are seeing increased demand for MSS. Though we started offering managed services a couple of years back, last year was when the breakthrough happened. Since then we have signed up 15 customers, including Vedanta Steels, Tea Board of India and Ananda Bazaar Patrika. Seeing the response, we are investing more in expanding our MSS business.” The company expects the MSS business to grow at a minimum rate of 30 percent over the next couple of years. In 2008, Macaws received around Rs 2 crore of its revenue from MSS.
MIEL e-Security, a security SP from Mumbai, caters to 12 mid-sized and small customers with various services such as information security log patch management and security monitoring. Anuj Gupta, Director, MIEL e-Security says, “Two years back, people were not that aware what MSS was. Now they have a fairly clear idea about the services, and are seriously looking at opting for MSS. This has led to an increase in the demand for such services.” The company has witnessed growth of around 20 percent in its MSS business this year. It already has an elementary security operations center (SOC) which delivers IT security services, and is planning to set up a larger SOC in the next six months.
Notes Harsh Bhasin, Director, Strategy and Alliances, Taarak India, “We have seen that customers are often not aware of the various solutions that are available.” Taarak entered the MSS space a couple of years back, and currently services 15 mid-sized companies with onsite 24/7 security management, monitoring and threat assessment services.
Services in demand
MSS is usually divided into three categories: hosted, monitoring and assessment services. However, it’s the monitoring and assessment services that are currently in vogue among small and large companies.
“Particularly in the BFSI and telecom sector, we have seen companies outsource their security monitoring and assessment services, while in the telecom segment companies are open to outsourcing the entire management of their security infrastructure,” informs Neenu.
Adds Bhasin, “We have seen SMB customers asking for services to manage firewalls, client antivirus applications and e-mail filters. Attack prevention is another service that is witnessing increasing demand from customers.”
“While the demand for services varies from customer to customer, the demand for MSS is largely for monitoring and e-mail filtering. In some cases, mature customers are also using SLA management,” says Saha. For instance, Macaws has signed on the Tea Board in Kolkata, where it’s providing the entire spectrum of MSS including UTM management, end-point management and management of antivirus and firewall applications. It is also providing SLA-based maintenance support.
Gupta from Miel says that he is seeing an increasing trend, among SMBs having global alliances, toward total outsourcing. “In many such instances the global partner makes it mandatory for the Indian company to have certified security infrastructure. Once they get the certification, to maintain the stringent security policies mandated by the certification they outsource the entire management because doing it internally would require them to invest in security specialists which they can’t afford.”
Many say that MSS adoption will be aided by the current economic crisis. “The global slowdown is expected to positively impact the MSS market. The Capex vs Opex savings will be the key catalyst behind the success of the services model when compared to the buying model. Further, in such a scenario, when cautious spending is the buzzword, and when all extra spending is being eliminated as a means of cost reduction, MSS will be perceived by Indian organizations as an effective way to access the latest security technologies without the pain of getting them approved by the management,” says Kumar.
For an SP, MSS is a perfect way to bring predictability to the income flow. As Gupta points out, “We can get monthly or quarterly revenues from customers who are using our services, and these revenues often act as an innoculation against market conditions. Using SLA-based managed services helps SMBs reduce upfront costs and free their internal resources.”
Set of challenges
While MSS is undoubtedly a big opportunity, it has its share of challenges too. “Low awareness of the service is one of the major obstacles that we face. Customers are also quite conservative, and often apprehensive about the security and privacy of their confidential data,” says Gupta. Setting up and maintaining an infrastructure is another challenge faced by SPs who want to enter the MSS space. According to Gupta, “The infrastructure required for setting up MSS requires substantial investments. For providing best-of-breed services, it’s imperative to set up a SOC and invest in good security professionals. Also, this infrastructure needs to be continuously upgraded, along with the skills of the personnel, to address emerging security threats.”
Nevertheless, Neenu predicts that “the coming two to three years will see a lot of investments in managed security, storage security, identity management, log analysis, biometrics, mobile data security and vulnerability management. Privacy, data protection, internal LAN security and VoIP security will also start making an impact on security services revenues. Huge demand is expected from all verticals.” F&S expects the MSS market to get more competitive with more players entering the fray, including telecom providers and large global service providers. |