As Australian businesses contend with a rapidly evolving cyberthreat landscape, many are looking for external assistance to keep their IT infrastructures secure.
Internal IT security teams are finding it increasingly difficult to provide the level of proactive monitoring and protection that their organisation requires. It’s a challenge that has increased amid growing adoption of cloud-based resources and ongoing work-from-home patterns.
For managed service providers (MSPs), these conditions actually present a significant opportunity. According to US-based research firm MarketsandMarkets, the overall value of managed security services will grow to nearly $US65 billion by 2026, nearly doubling in size since 2021.
There are five key drivers that will make this trend significant for MSPs. Those that understand the opportunity and take the steps needed to capitalise on it will be in a strong position to grow their operations and boost profitability. The five drivers are:
- The rapid growth of cyberthreats:
The cyberthreats faced by Australian businesses are increasing in both number and sophistication. Phishing attacks are becoming more difficult to spot, leading to a rising tide of ransomware that can cause significant financial and reputational damage.
Industry research has found the average cost of a data breach reached an all-time high of $US4.35 million in 2022. The increasing frequency of attacks, combined with the potential losses from remediation and restoration, has underscored the need for dedicated cybersecurity experts who can mitigate the risks.
A study by IBM Security found the average time to identify and contain a breach in 2022 was 280 days. This trend presents opportunities for MSPs to offer their customer base extended detection and response (XDR) and managed detection and response (MDR) services.
- A shortage of skilled IT security specialists:
The ongoing cybersecurity skills gap has left many organisations with a shortage of the in-house expertise needed to effectively manage their security needs. According to the International Information System Security Certification Consortium (ISC)², the global cybersecurity workforce shortage reached 3.4 million people in 2022.
Small, midsize, and distributed enterprises lack the staff, expertise, time, and budgets that larger enterprises can bring to bear against cyberattacks. This is despite SMEs representing a significant portion of national GDP.
MSPs are well placed to fill this cybersecurity skills gap and provide specialised, cost-effective security services to their clients. Services, packages, and pricing strategies can be tailored to offer affordable and flexible solutions that help businesses stay protected.
- Security tool sprawl:
Another significant issue faced by many businesses is cybersecurity tool sprawl. This occurs when additional tools are procured over time and added to an already complex security framework.
A study conducted by the Ponemon Institute found that, on average, an organisation uses around 47 different security solutions sources from as many as 10 different vendors. The complexity of managing multiple solutions and vendors can lead to gaps in security coverage, lack of visibility, and increased costs.
MSPs that choose vendor partners with a comprehensive security platform can solve these issues both for themselves and their customers. A consolidated platform offering can reduce the total cost of ownership, lower the cost of service delivery, and strengthen an MSP’s margins.
- The pressure of regulatory compliance:
With the implementation of stringent government regulations relating to cybersecurity, businesses of all sizes are facing increased pressure to ensure compliance. Non-compliance can result in substantial penalties as, for example, Meta found when it was fined a record $US1.3 billion in May this year for violating GDPR rules.
MSPs have a tremendous opportunity to deliver the cybersecurity solutions and reporting required to help clients avoid costly penalties by achieving, maintaining, and demonstrating compliance.
- The important role of cyber insurance:
The growing usage of cybersecurity insurance by businesses is also spurring growth in the managed security services market. According to one report, the global cyber insurance market is projected to reach $US20 billion by 2025, up from $7.8 billion in 2020.
As cyber insurance adoption rises, businesses are investing in managed security services to enhance their security posture and meet the very stringent requirements set by insurance providers.
For MSPs, this trend represents a lucrative opportunity. Well-positioned firms can leverage their expertise in cyber risk assessment to offer consultation services for businesses looking to purchase cyber insurance policies.
These services can be offered to an existing client base as well as being used to attract new clients. Additional assistance can be offered in the form of ongoing compliance monitoring and assistance in filing a claim should an incident occur.
It’s clear that the provision of managed security services represents a significant and potentially lucrative opportunity for MSPs. By taking the time to understand the market and developing a suitable product and service portfolio, proactive MSPs can significantly expand their business.