Who’s stealing your stuff?
India is fast emerging as a significant market for security services and products, as organisations across various verticals are now investing in building a robust security infrastructure. With the increase in adoption of smart devices, organisations in India have become particularly vulnerable.
With the rise in IP traffic and data growing at a rapid speed, networks are being threatened like never before, and the new threat landscape has taken many shapes and definitions. The weakest link in the security apparatus is an employee with access to organisational systems through his own device. These threats are commonly attached with the concept of “Bring Your Own device” (BYOD). IT security issues on cloud environments have almost reached the same level as attacks on traditional IT, with increased adoption of cloud-based services by the enterprise. Securing critical data in the cloud, even a private cloud, can pose serious security risk when moving data and applications from conventional enterprise data centres into cloud environments, especially public clouds. Even in private clouds, financial organisations face increased risks posed by having multiple data sets and applications sharing the same physical services.
In 2013, the IT security market was valued at over Rs 5,000 crore. Due to the rapid adoption of IT security solutions and services by enterprises of all sizes, this value was expected to grow by 12 per cent to reach Rs 6,600 crore in 2015, with hardware, software and services making up 20 per cent,
23 per cent and 57 per cent of the share respectively.
Weak security has direct impact on business operations and this impact can be major as losing proprietary intellectual property or worse, customer trust. Since a cyber attack can set a company years behind in product development, revenue and reputation, security is now a board-level conversation. Companies recognise the threats and vulnerabilities and are adopting measures not just to detect these threats, but also prevent and fight back. In India, several government initiatives and Public-Private Partnership (PPP) efforts towards educating the end consumer are gathering pace. This, along with several other factors, will see the IT security market cross the Rs 8,000 crore mark by the end of 2017.
The driving factors behind this growth are the increasing numbers of security issues for which bigger budgets are being allotted to IT and regulatory forces. As of June 2015, India has over 350 million Internet users and is the second largest user base in the world. By 2017, this number is expected to reach an impressive 500 million, but a poor penetration rate (a measure of amount of sales or adoption of a product or service compared to the theoretical market for that product or service) of 19 per cent (approx) limits the potential. The adoption of mobile Internet is expected to drive the growth of Internet penetration. Urban areas in India have a number of wireless telephone connections for every hundred individuals living within an area of 142.39 per cent. The same number for the rural area was only 44.32 per cent, as of September 2014.
Users accessing the Internet through their mobile devices have become a key driver for the increase in overall Internet subscriber base in the country. As of February 2015, only 13 per cent of subscribers in India were using 3G and 4G networks. Based on Cisco’s 2014 VNI Mobile Forecast, India is at the lower-end of global use of data, in that mobile users average 149 MB per month, this data average is reflective of conditions where, 47 per cent of network capacity is driven by streaming audio and video and 15.3 per cent of connections are via smartphones. The increase in Internet users is mainly driven by a significant growth in smartphone subscription in India that witnessed a growth of 55 per cent to reach 140 million subscriptions for the year. Smartphones account for around 15 per cent of the total mobile subscriptions in India and 11 per cent of Indian population are smartphone users at present. About 65 per cent of India’s Internet traffic – as of May 2015 – was driven by mobile devices.
India has a large personal computer installed base of 55-60 million, growing at a rate of over nine per cent and is expected to reach around 70 million by 2017. Out of the total number of PCs installed, 55 per cent are used by individual consumers and the remaining 45 per cent by businesses and institutions.
The number of mobile Internet users in India is expected to rise to 314 million by 2017, nearly double the 159 million at 2014-end. The IT security market comprising of MDM, UTM, EPS and Retail segments is expected to be around Rs. 1,500-1,800 crore with the Retail segment contributing the largest share to the overall market. Quick Heal Technologies Limited is offering solutions across all four of these segments and is a market leader in the retail segment with over 30 per cent market share, according to its MD and CEO, Kailash Katkar – whose IPO priced at Rs 311 to Rs 321 per share for fresh issue of Rs 250 crores comprising 62,69, 558 equity shares opened on February 8, 2016 and closed on February 10, 2016. Highlighting Quickheal’s beginnings in Pune from a repairing workshop for banks’ ledgers and calculators, Katkar recalled switching to computers and developing anti-viruses, whose sales – hampered by software piracy – were pushed through only by personal efforts.
“Our first anti-virus was +unique+ in detecting and deleting viruses alongside backup, besides retail antivirus software and – in 2010 – mobile security software. Today, we are expanding through distributors in 25 to 30 countries with offices in (besides India) UAE, Kenya, South Africa, Japan and USA. We spend 12 per cent to 15 per cent of our total revenue on R&D, and have put “Honeypots” on the net to “lure, capture and eliminate” viruses. Today, about 2.5 lakh viruses are emerging daily – compared to barely few in previous decades – and we plan to invest this IPO fund on Research and Development in battling this menace,” he said while describing Quickheal as holding 30 per cent of the Indian market retail business. “In the mobile segment, we are focusing on Android apps as the “malware” are focusing on the potential here in fake apps,” he added.
The Retail market standing at around Rs 600-800 crore comprises of the antivirus products meant for the home user. Retail offerings have a plethora of features apart from the usual virus and spyware scan. They enable safer online transactions for the home users, allow the users to plug and scan mobile devices and also offers stealth mode surfing along with the traditional firewall. Cloud-based email security monitors all email activity to and from the system. Real time cloud-based antivirus restricts access to malware-infected, fraudulent and phishing websites and also protects against data theft. The solution offers parental control to monitor child Internet access. This segment is expected to grow at a rate of 20-25 per cent Y-o-Y.
The second largest contribution comes from the End Point Security (EPS) segment, which is around Rs 400-500 crore and is expected to grow at 10-15 per cent Y-o-Y. It includes features for advanced device control and the administrators have access to comprehensive knowledge about the hardware and software configuration of every endpoint. It also includes an intelligent firewall, application control advanced detection of threats and empowers the administrator to have centralised control for updating all connected systems.
The Unified Threat Management (UTM) market is around Rs 300-350 crore, and witnessing a growth of 15-20 per cent Y-o-Y. It not only protects against intrusion but also enables content/spam filtering, intrusion prevention plus the traditional anti-virus protection. The UTM solution empowers the administrator to block or allow protocols for individual users as well as user groups. The solution also includes features like: email traffic monitoring, content filtering, and virtual networking enablement (site-to-site, user-to-site). At the management level, the solution offers bandwidth management, load-balancing and automatic link failover, and also facilitates comprehensive IT policy management.
The Mobile Device Management (MDM) segment is the fastest-growing segment among the four segments. Witnessing a Y-o-Y growth of 25-30 per cent, the MDM market is currently valued around Rs 80-110 crore. Mobile security offers protection against virus attacks, theft and unwanted contacts. Features include device scan, privacy-setting option with call and message filter, intrusion-etection and remote device management to track lost devices. It also incorporates a personal security feature to send SOS messages in time of need.
With the rapid adoption of smartphones in India and the growing trend of BYOD at workplaces, this segment is considered to be of key strategic importance among the IT players in the market. India is currently home to 51 million SMBs, employing over 40 per cent of India’s workforce amounting to about 116 million people. The SMB sector contributes 38 per cent of the national gross domestic product and comprises 40 per cent of India’s total exports. In terms of technology adoption, SMBs are likely to spend around Rs 71,300 crore in 2015 on IT products like Social, Mobility, Analytic and Cloud (SMAC) etc. By 2020 this expenditure is expected to rise to Rs 1,54,800 crore with a CAGR of over 16 per cent.
Out of the base of 51 million SMBs, around 12 million have high degree of technology influence and are looking to adopt new IT products. The SMB segment is a key driver for the Indian IT sector. Players from various industry verticals are gearing up to be technology-ready and are heavily investing in latest technology. By the end of 2015, 40 per cent of SMBs will be technology-influenced which is expected to increased to 90 per cent by 2020. Professional services will be the biggest contributor in the total base of technology-influenced SMBs in 2015 with a share of around 19 per cent, followed by the Retail vertical with 18 per cent and Manufacturing and Travel & Logistics with 14 per cent each. Restaurant & Hospitality, Education, Real-Estate and Auto & Auto Ancillaries will contribute 10 per cent, nine per cent, eight per cent and four per cent, respectively.
Regardless of various initiatives and strategies adopted to promote the small and medium enterprise segment, Indian SMBs are forced to tackle multiple challenges to nurture their business, which leads to IT security issues. Internet connectivity is the easiest way to breach any organisation’s premises and hamper its day-to-day functionality. Secondly, to process in an efficient manner, it’s very important for SMBs to use technology which requires implementation of various software and hardware products. Integrating disparate products can also create risks for the in-house IT infrastructure and loss of valuable information. Lack of funds is another big concern for SMBs, which restricts them to use unauthenticated products – a key reason behind cyber-attacks. As adoption of mobile devices and BYOD policies become basic necessities to run businesses, they have also allowed unwanted malwares from other networks to enter the in-house networks of SMBs.
Among emerging opportunities, Digital India aims at the creation of a robust IT infrastructure and delivery of all services digitally, thus reducing paperwork. It also plans to connect rural areas with high-speed Internet networks. At the start of this project, top CEOs from India and abroad committed to invest Rs. 7,100 crore towards the initiative. As Digital India and the concept of Smart Cities takes shape, security needs to be considered as integral part rather than an afterthought. The increasing synchronization and interpretation of existing digital data and processes within government departments will require greater security postures, while keeping critical data flowing in such a discouraging threat environment.
The “100 Smart Cities” Plan aims at developing 100 smart cities as satellite towns or larger cities. Over the span of next three years, the central government plans to recognize 100 cities and in collaboration with the state governments fund these cities, aiming for better infrastructure which includes robust IT connectivity and digitisation. A total of Rs. 48,000 crore will be spent on this project by the Central Government and an equivalent amount by the State Governments over the next five years.
By 2020, India is expected to have 2.7 billion connected devices comprising of five-six per cent of the global IoT industry. The recent IoT policy drafted by the Department of Electronics and Information Technology aims to create an IoT industry in the country worth Rs 90,000 crore by 2020. IoT is a seamlessly-connected network of embedded objects/devices, with identifiers, in which M2M (Machine to Machine) communication without any human intervention is possible using standard and interoperable communication protocols. Interestingly, phones, tablets and PCs are not included as part of IoT.