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Report: Despite Budget Cuts, Federal Information Security Market Will Grow
By Yasmin Tadjdeh

Despite belt-tightening within the federal government, money will not stop flowing to the information security industry, one market forecast said.

Growing cyberthreats targeted at government agencies will not only keep information security companies afloat, business will grow by leaps and bounds, a new report by Deltek, a Herndon, Va.-based provider of enterprise software and information solutions, concluded.

“Relentless threats from all sides, emerging technology, and new vulnerabilities contribute to a fluid federal cybersecurity defensive posture,” said the report. “Federal information systems continue to be threatened by attacks from a variety of sources. Meanwhile, agency technology transformation is changing the environment and resources that need to be secured. “

By 2017,the federal government will invest $14.3 billion in vendor-furnished information security products and services, up from $9.9 billion in FY 2012. The report also predicts that the demand will grow at a compound annual growth rate of 7.6 percent.

While funding may grow scarce, the cybersecurity threat will be too great to avoid, the report said.

“Agencies are working to adapt to the pace and variety of cyberthreats with the available personnel, skill sets, and tools that they have, but often it’s like playing catch-up,” John Slye, an advisory research analyst at Deltek said 
in a statement. “Even with tighter budget pressures, agencies cannot afford to let their guard down. To get ahead of this game they will need sustained investment.”  

Cyber-attacks are up 700 percent since 2006, the research showed. The most common types of incidents reported in 2011 included malicious code, improper usage and unauthorized access.

“Information security investments continue to be driven by the threat environment, policy, workforce and technology gaps,” the report said.

Investments will not just be with products, but with personnel and the services they provide. According to the Office of Management and Budget’s FY 2011 Federal Information Security Management Act report, 75.5 percent of the Federal Civilian IT Security Costs went toward personnel.

While investments in information security will grow as a result of increased cyber-attacks, the expanding role of technology is also a factor, the report said. The rise of mobile platforms, the demand for continuous access and cloud computing are a few examples. Additionally, the report attributes challenges within the government information security workforce, such as a lack of skilled personnel, as another reason for increased investment.

The top five information security spenders over the next five years will be the Defense Department and its agencies, the Air Force, the Department of Homeland Security, the Army and the Navy, the report said. The defense agencies, by 2017, will invest $4.3 billion into information security, the report estimated. The Air Force will trail at an estimated $1.3 billion.

As part of Deltek's Federal Industry Analysis program, the report is meant to help federal IT contractors “identify the vulnerability, technology, workforce and policy trends shaping the information security landscape,” the report said. Its methodology is based on analysis of the President’s FY 2013 budget request, economic forecasts, congressional, legislative and policy documents and other data sources.

Photo Credit: iStockphoto


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