Europe cybersecurity spending shifts to compliance

CONTEXT said businesses across Europe, the Middle East and Africa are directing more cybersecurity spending towards compliance, training and access controls. Its third-quarter distribution sales data showed those areas growing faster than network security.

Revenue from compliance, awareness and training products rose 75.9% year on year, while identity and access management increased 33.7%. Network security, still the largest segment tracked by the market intelligence company, grew 5.0%.

The figures suggest companies are spending more on tools and services that help them document cyber risk management, control access to systems and show internal processes are working. The shift comes as organisations face greater pressure to demonstrate how they manage cyber risk and financial resilience.

Network security still accounted for 51.8% of cybersecurity distribution revenue in the quarter. Higher prices for enterprise firewall equipment helped support growth in that category, CONTEXT said.

Infrastructure protection also expanded, rising 16.1% as businesses invested in server security, vulnerability identification and replacement specialist equipment. Several other markets declined, however, including data security, cloud security, endpoint protection and email security.

Some of those falls reflect changing purchasing routes rather than a simple drop in demand, according to the company. Some customers are buying directly from vendors, while others are shifting towards broader security bundles and managed service agreements.

"Businesses need to demonstrate that they are managing cyber risk properly, and that is influencing where they spend," said Joe Turner, Vice President of Sales & Research at CONTEXT. "They want clearer oversight of who has access to their systems, better-trained staff and evidence that they are meeting their obligations. For distributors and resellers, this creates opportunities to help customers address specific business needs."

Regional split

The spending shift was not uniform across the region. Benelux was the fastest-growing market in the data, with revenue up 37.9%, led by a 57.9% increase in the Netherlands.

The Nordics also posted strong growth, with revenue rising 26.3%. Sweden and Norway recorded gains of 63.2% and 40.4% respectively, which CONTEXT linked to demand for cloud security and managed services.

By contrast, the UK and Ireland market was broadly flat, slipping 0.8%. UK sales fell 1.1%, which the company attributed to delays in enterprise purchasing, while Ireland grew 3.0%.

Southern Europe remained the largest regional market in the company's tracking, accounting for 27.2% of cybersecurity distribution revenue. Revenue there rose 9.9%, supported by growth of 13.8% in Italy and 12.0% in France, while Spain and Portugal posted smaller gains.

Germany, Austria and Switzerland together represented 26.3% of tracked revenue and grew 7.4%. Germany rose 7.1% and Switzerland 20.1%, while Austria declined after large public-sector contracts in the previous year.

Outside Western Europe, South Africa stood out with growth of 43.1% in a Middle East and Africa market that expanded 4.5%. Central and Eastern Europe had a weaker quarter, with revenue down 19.0% as gains in Poland and Slovakia were offset by declines in Czechia and Hungary, particularly in software designed to protect employee devices.

"The regional picture shows how much local purchasing patterns matter," said Turner. "Strong growth in the Netherlands, Sweden and Norway contrasts with more subdued conditions elsewhere. Channel businesses need to understand demand in each market and where customers are directing their budgets."

Channel pressure

For distributors and resellers, the data points to a mixed market. Demand is rising in compliance-related categories and access management, but changes in how customers buy are complicating the picture in several established product areas.

That leaves channel companies balancing two pressures: meeting customer demand for products tied to regulatory oversight and staff preparedness, while adjusting to the growth of direct purchasing and broader service-led contracts.

"Distribution figures need to be read alongside changes in how customers buy," said Turner. "Some spending is moving into direct agreements or broader managed services. The opportunity for the channel is to stay close to customers and help them make security investments that meet both their operational needs and regulatory responsibilities."