Stuck In The Middle, Security Departments Turn To Outsourcing

More than half of enterprises are now using third-party security services, studies say
Just a few years ago, many IT administrators regarded third-party security services with skepticism. They were concerned that outsourcing any part of the security picture would introduce new risks, and that outsiders would not understand their specific security requirements.

How times change.

Today, as the volume of malware and other threats grows -- and as companies cut back on IT staffing, equipment, and software during difficult economic times -- security pros are looking, favorably, at the notion of getting some outside help. In fact, in a new report published earlier today, Symantec reports that more than half -- 61 percent -- of enterprises are now using third-party security services or are planning to employ them in the next 12 months.

"It's a combination of things," explains Grant Geyer, vice president of managed services at Symantec. "On one hand, the threat is getting worse -- our statistics indicate that the amount of unique malware out on the Web has grown 571 percent since 2006. On the other hand, about half of the companies say they're understaffed in security, and 26 percent say they don't have the funds they need to hire appropriately. And in this economy, it's not surprising that 19 percent said they've been affected by layoffs [in IT]."

Recent studies published by Forrester Research support Symantec's conclusions. In its study of the security industry released in December, Forrester found that third-party security services was one of only a few line items where spending was expected to increase among enterprises this year, although the increase is less than 1 percent. In a separate study on managed services published in November, the majority of businesses said they use third-party services for email security and content filtering, and almost half outsource their firewall monitoring.

"The two top drivers among firms for using a managed security service provider are the demand for a specialized skill set (29 percent) and the need to reduce costs (28 percent)," Forrester says in its report. "Outsourcing addresses the major challenge: It provides skilled personnel you lack, it costs less (or at least provides greater cost transparency and predictability), and it removes a set of tasks you need to manage."

Symantec's study found similar results. In that study, the need to offer 24/7 security coverage was the top reason for using third-party services (55 percent), followed by the need for access to skilled expertise (48 percent), and the need to lower overall costs (45 percent).

Outsourcing security has seen a steady growth of interest during the past few years, but that growth has "spiked like a hockey stick" since the economy went south, says Brian Czarny, vice president of product marketing at Webroot, an independent vendor that focuses on security-as-a-service.

"Previously, compliance was a big driver, but right now, cost is the No. 1 issue," Czarny says. "IT and security people are finding that their budgets are on hold, but they can't afford to cut back or shut down what they're doing in security. So they're trying to reduce [total cost of ownership] by operationalizing their costs, and outsourcing is one way to do that."

Email security -- including encryption, archiving, and/or content inspection -- is the most popular form of security outsourcing in the enterprise, experts agree. Web security, including firewall management and filtering for malicious or inappropriate content, is generally considered to be the second-most popular service.

"What happens is that a company brings in a third party to do something specific, like email security, and then they see how easy it is," Czarny says. "Then they start asking if there are other places where they can outsource, as well."

Geyer says companies also are looking for ways to improve the effectiveness of their security efforts. "In our study, we found that 97 percent of the companies we surveyed had experienced some sort of cyberloss in the past year," he notes. "Forty-six percent said they had experienced downtime due to a security incident, and 31 percent said they had lost at least some personally identifiable information.

"I find those numbers staggering," Geyer says. "What that says, at least in some cases, is that companies have thrown a lot of money and equipment at the security problem over the years, but the situation is actually getting worse. So they're looking for ways to gain some expertise, to use what they have more efficiently."

In recent years, security services -- particularly managed security services -- have been purchased largely by smaller businesses that don't have the in-house expertise or staffing to handle all aspects of security, particularly as threats grow more sophisticated. "The SMBs are still driving a lot of the market," Czarny says, "although when we look at that part of the market, we're including larger companies now, some with as many as 5,000 employees.

"But even in large enterprises, there's a cost factor that's creating more interest. A lot of those enterprises now have appliances at every gateway, and they're finding that there are a lot of soft costs associated with managing and maintaining them. It can take a lot of time when you're doing it yourself."

Does outsourcing security really save money? Some experts say it does, while others maintain third-party services may actually be more expensive but offer better cost predictability, which can be harder to achieve when everything is done in-house.

In either case, more companies will likely be taking a closer look at third-party services, observers say. "For IT, it's sort of a perfect storm of problems," Geyer says. "The threat is growing exponentially at a time when budgets are being reduced and skills are harder to find."

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