The global encryption software market is expected to reach USD $8.4 billion by 2024.

October 8, 2018

6 Min Read


Madhumita Chaudhary

By Madhumita Chaudhary, Grand View Research

Organizations today face numerous assaults to their systems, data and critical information from every angle — everything from physical attacks to phishing mails. Studies suggest that a lack of awareness and expertise pertaining to such security breaches is leaving businesses at a high risk, which is further impacting their brand reputation and resulting in high penalties.

In recent years, encryption to protect sensitive data has emerged as a fundamental aspect of information security. Presently, encryption software is leveraged in an array of settings including enterprises, defense, retail, banking and financial institutions, education and industrial automation.

Encryption software helps protect the confidentiality of the information stored in the database and data in transit in line with the compliance and security requirements of any organization. This renders the data unreadable even to the authorized person, thereby enhancing the security of the confidential data.

Organizational vulnerabilities are continuing to rise, with enterprises working through disaggregated point solutions and a multitude of management platforms. This is expected to drive the global encryption software market at a compound annual growth rate (CAGR) of 15.9 percent between 2016 and 2024.


Top 3 Market Growth Factors

Let’s take a look at the top three factors driving market growth.

1. Regulatory and Security Compliance to Accelerate Growth

Publicized data loss, together with new governance and compliance regulations, is expected to drive the need for customers to encrypt data. Organizational best practices point toward data encryption as a key solution for data privacy. Therefore, solution providers today offer products that allow enterprises to comply with security mandated by regulations such as the HIPAA, CASB1386, Payment Card Industry Data Security Standard (PCI DSS), DoD 5015.2, GLBA, etc.

Presently, encryption is more than just a suggestion for many businesses that are legally required to comply with domestic as well as international laws. For instance, the Gramm-Leach-Bliley Act of 1999 (known as the GLBA) in the U.S. mandates organizations to protect the confidentiality of consumers or non-public personal information. This calls for encryption software and is expected to spur the market growth over the next eight years.

2. Maintaining Brand & Business Reputation

An organization’s brand image or reputation is a crucial part of its marketing mix and, therefore, requires as much protection as any other core asset or property owned by the company. For companies dealing with hard goods, issues such as contaminated products can be resolved relatively quickly by removing the products from shelves. It’s different with digital assets, however. Data leaks are far more critical, given the risk of confidential customer records being leaked in seconds. Data breaches such as this can affect a company’s brand value and market reputation. They must be handled with …

… utmost urgency.

Key-Market-Growth-Drivers-2017.jpgOur research shows that more than 60 percent of consumers are not likely to do business with a company that has had a breach where financial information was stolen. A data breach incident can cost an organization millions, both monetarily and in terms of negative impact on the brand image.

Security and data protection are critical elements in protecting an enterprise’s brand reputation and maintaining customer loyalty. Encryption software can help prevent data loss, theft or leak.

3. Protecting Intellectual Property

Intellectual properties (IPs) such as trademarks, patents, copyrights and others are key success factors for companies today. Because of the proliferation of the internet and digitized information, IP has become increasingly vulnerable to infringement and theft, requiring companies to implement solutions for protecting it. Encryption software has emerged as a critical element in accomplishing this.

Security apart from data protection includes the protection of IP and corporate data, and controlling fraud. The relative significance of protection is driven by the likelihood of attack and the value of the information or the product. Stakes are high for the enterprise that performs transactions in unsecured locations or over the internet and for those whose competitive position in the industry is driven by the data they own.

IP loss can cost organizations a hefty amount and even threaten their position in the market. Further, hardware elements including USB devices, memory cards, TPMs, and ASICs are the vital backbone of cybersecurity. Software applications contain IP and sensitive information whether it is installed on a PC or a high-value hardware device.

In Asia Pacific, enterprises are becoming aware of the threats due to the increasing number of high-profile attacks and the potential damages that the businesses face if sensitive information is leaked, thereby driving the regional market growth of encryption solutions.

Cyberattack is a common phenomenon for North American businesses; one of the obvious reasons for this is the increasing technology penetration in the region. For example, the rise in the implementations of the BYOD program across businesses puts them at risk for being hacked. This is one of the primary reasons expected to drive the demand for encryption software solutions.


Cloud Adoption Will Catapult Encryption Deployment

According to our research, more than 30 percent of enterprises in recent years have turned over their encryption process to cloud as of 2017. This statistic demonstrates an increased dependence on cloud, which is expected to drive the cloud-based solutions demand.

The research also shows that although the on-premises encryption software deployment segment captured a sizeable share of the overall revenue generated in 2015, the cloud-based encryption market remains a viable one and is expected to offer vendors many opportunities for expansion. Cloud-based encryption software will grow faster than the market for on-premises solutions over the forecast period.

Encryption strategies in businesses underscore the rate at which cyberattacks and breaches are proliferating. The stakes for organizations are too high to stand by and wait for the next attack, before introducing an effective data protection strategy. Deployment of encryption solutions plays a crucial role in these strategies and will also play an important role in accelerating market demand over the forecast years.

The gradual opening of the market for next-generation tools to plug data leaks against a backdrop of megatrends including virtualization, Internet of Things (IoT),and consumerization of enterprise IT will be a key factor to watch over the next few years.

Madhumita Chaudhary is a team lead for Grand View Research, with more than five years of experience focusing on the information and communication industry. Her expertise lies in marketing studies focusing on cybersecurity and managed security, among others. She also works in statistical model implementation, secondary research, data interpretation, forecasting and market sizing. Chaudhary holds a bachelor’s degree in computer science and an MBA in marketing management from Pune University.

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