British Cyber Security Market 2020
A British Government Report on the national Cyber Security industry shows that even with Lockdown and its consequent economic impact, the cyber security sector is growing and fast becoming a very important to all areas of business. Funding for UK cyber security start-ups has increased by a staggering 940 per cent since the beginning of lockdown, with £496 million being raised in the first half of 2020, almost outstripping the 2019 total of £521 million. Alongside this investment surge, the current UK National Cyber Security Strategy which runs from 2016 to 2021 has a £1.9 billion budget.
Produced by the Dept. of Digital, Culture, Media & Sport the Report shows, there continues to be significant demand, both at home and internationally, for the products, services and expertise offered by the UK cyber security sector. Over the last two years, there has clearly been significant progress within the sector, which has reported double-digit annual revenue and employment growth, as well as record investment in early-stage companies.
Key Aspects Of The Report
Number of Companies: There are 1,221 firms active within the UK providing cyber security products and services (2019).
This reflects an increase of 44% since the baseline report (846 firms). In the last two years, we have identified 118 new business registrations within the cyber security sector. In other words, a new cyber security business is registered every week within the UK. 90% of the sector consists of SMEs, with an associated estimated turnover of £2bn (24% of the sector’s revenues).
Sectoral Employment: There are approximately 43,000 Full Time Equivalents (FTEs) working in a cyber security related role across the cyber security firms identified. This reflects an estimated increase of 37% in employee jobs over the last two years.
The Majority (65%) of cyber security employment is based within large firms.
Sectoral Revenue: Total annual revenue within the sector has reached an estimated £8.3bn. This reflects an increase of 46% since the 2017 baseline analysis (i.e. revenue has increased by £2.6bn from £5.7bn). On average, we estimate that revenue per employee has reached £193,500 (an increase of 7% since baseline).
Gross Value Added: Total Gross Value Added (GVA) for the sector reached £3.77bn. This means total GVA has increased by 60% in the last two years, from £2.35bn). GVA per employee has reached £88,000 (an increase of 17%).
Products and Services: The most commonly provided cyber security products and services (see Section 2.3) by the sector include:
- Cyber Professional Services (provided by 71% of firms)
- Threat Intelligence, Monitoring, Detection and Analysis (46%)
- Endpoint Security (including Mobile Security (37%)
- Emerging Sub-Sectors: IoT Security, SCADA and ICS, Post-Quantum Cryptography
Growth Drivers: The cyber security sector has grown through both increased domestic demand which has been particularly driven by the implementation of GDPR and through increased exports. Further, external investment and increased procurement of cyber security products and services has also helped to increase demand and growth within the sector
Investment: Investment in the UK Cyber Security Sector demonstrates that: 2019 was a record year for cyber security investment, with £348m in fundraising across eighty deals. Over the last four years (2016-19), total external investment identified within the cyber security sector has exceeded £1.1bn, demonstrating how investment and confidence has grown in recent years.
Industry Support: The UK Government has invested in a range of initiatives to help cyber security start-ups, early-stage companies, and high growth companies develop market- leading products and secure external investment. This research highlights that these initiatives have a key role to play in helping to:
- develop new products and services (particularly innovative products that can tackle new cyber security challenges).
- connect high-potential, high-growth businesses with investors; and
- develop a more coherent ecosystem of cyber security providers, through promoting collaboration and mentoring.
Significantly, the Report also details how the cyber sector is vital across all UK sectors, particularly in securing emerging technologies in spaces such as consumer IoT, AI and smart cities solutions.
The broadening of cyber security sub-sectors highlights the need for growth to continue in order to overcome the significant challenges facing the sector going forward, including the ever developing threat and the skills shortages which continue to mean companies struggle to train and retain cyber professionals. Unlike the tech sector as a whole, where 80 per cent of VC funding goes to London and just 20 per cent to the rest of the UK, within cyber security the success is nationwide, with 55 per cent of the UK’s cyber start-ups based outside of London. In the North West of England, the number of cybersecurity start-ups has more than doubled in the past two years from 39 registered firms to 80.
This is also prevalent in hiring patterns, where traditionally London has been the centre for IT security hiring, representing 41 per cent of total jobs in the UK and the roles are emerging more evenly across the country.
While businesses are largely committed to cyber security initiatives, workers have little faith in the ability of their employers to safeguard critical data and other assets, according to data gathered by TechRadar Pro. A survey of their readers found the majority (70%) of staff believe cybersecurity is a central focus for their business, yet half (45%) of the same group also feel ill-equipped to handle the cyber threats their company faces. Many employees (66 %) are also skeptical about the preparedness of their colleagues to adapt to changes in the cybersecurity landscape
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