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The network security market grew at a healthy 40% last year. Datacraft came back lead the players in India. Last year was also conspicuous by the absence of large scale virus attacks or DoS. Yet, the security market grew without any large-scale fear or hysteria. The network security market closely follows the infrastructure network deployments. And this was clearly reflected in the growth last year. The lag is typically 6-12 months. The major adopters of security continued to be BFSI and ITeS. The large network deployments on the telecom network did not reflect in their adoption of security, primarily because they are still consolidating on their voice strategy.

The key drivers of security adoption in the last year were compliance, however the scope of the term compliance would have to be widened a bit, if only for the purposes of the current discussion. Basel II from the RBI drove the BFSI, trying to comply with the international customer's demands drove the IT and ITeS segment and the manufacturing segment to an extent, and trying to keep up with the MNC HQ drove the MNC's offices in India.

Trends
One of the reasons for absence of the outages was large scale deployment of anti-virus solutions. A new category of products was added to this product mix.

Anti-X: It incorporates antivirus, antiphishing, antispam, URL blocking and other products of similar kind. Also, the customers migrated to acknowledging threats, other than those that could be addressed by Anti-X.

This realization was driven by new threats such as electronic fraud and theft prevention prevalent in the process of e-Commerce.

Though immediate threats seemed to have become less relevant in the buying decisions, anti-viruses continued strong sales growth and the Anti-X category of products gained ground. Most of these were however bundled with the firewalls and the gateway security solutions. The change in customers' buying decisions reflected that. While they were buying the usual firewalls and VPN, growth was beginning with the Intrusion Detection System (IDS) and even the Intrusion Prevention System (IPS). These are much higher in value, and are currently being considered (deployment is still not much) by the large customers only.

Also, companies faced new threats, not only from the outside but also from within the organizations. The growth of Intranet controllers is also a trend. There was always the threat of malicious employees making unauthorized access to data on the LAN. New threats are coming from mobile employees, contract workers, and even the work from home culture. Mobile employees will continue to bring in infected mobile devices behind the secure perimeters, from where these devices are free to spread the viruses and spams. Contract employees could be within or outside the companies' premises, but they will need to access certain parts of the company's network. Therefore the security features of a WAN are now being integrated on to the LAN networks. Now, the users within the LAN will first have to be qualified to use the network, by being up to date in terms of the security policies. Even when inside the LAN, different users have different levels of access to the resources.

In terms of trends in the security architecture, FY 2005-06 saw the continuance of the layered architecture approach for the data centers and the HQs. The new trend here was a greater adoption of unified threat management (UTM) solutions at the branch offices and the SMBs. The data center and the HQ host the most vital information and applications servers, therefore they needs to host engineers for the maintenance of the point solutions.

The security needs of the branch office using those servers is much less, so in the security-efficiency tradeoff, they go for a solution that is simpler to manage, give acceptable levels of security, and does not cost the sky to buy and maintain. This is happening to the extent, that the router and the firewall are today in one box, with the various other security modules being a part of that box.

Interestingly, even manufacturing sector adopted security solutions. Today, the manufacturing organizations are more open to outsource their security, compared to BFSIs. But in the near future security will emerge as a value added service. It could become a part of the security providers' offerings once data starts contributing more to their revenues. Since lot of other security providers would provide lucrative applications, this would be an important source of revenue.

Also, endpoint security started featuring as a part of network security. Here the new trend was the focus on users of mobile computing, both when they were outside or within the secure perimeter. Last year also saw large businesses from the government sector. This business followed logically from the SWAN and e-Gov network rollouts that were previously undertaken.

Service Vendors
HCL Comnet did a business of Rs 34.5 crore last year. Out of this, revenue for security services was Rs 22 crore. The company currently has about 200 active customers. Its largest deal last year was with National Insurance Company. It is estimated that this deal would be about Rs 12 crore. Some of the other deals for them last year were with SEBI, National Informatics Center, and LIC. SEBI alone is estimated to have given HCL Comnet a business of Rs 5 crore.

In terms of how they deployed the equipment from various OEMs; Cisco dominated their deployments with a share of 45%. Checkpoint took a little more than 20%, and the rest was almost equally shared between others such as TrendMicro and Juniper. The company had 60% of its revenue from large customers, though they contributed only 20% of the business by volumes. The company grew more than 100% last year, however, it lost the SBI deal to Datacraft.

With the SBI win, a presence in over 300 cities, and about 160 active customers last year, Datacraft reigned in about Rs 16 crore from the security services business.

Its revenue from IT security business was about Rs 68 crore. Its business from SBI came in various deals, of which two were Rs 16.1 crore and 27.6 crore. The SBI deal is so important for the company that it has 500-strong workforce only for the SBI account. In the last year, SBI gave Datacraft a business of about Rs 27 crore. VSNL, GE, Genpact, Bharti, Syndicate Bank were some other large customers for Datacraft last year.

Among its clients, BFSI constituted 40%, ITeS 35%, telecom 15%, and 5% involved other verticals such as manufacturing. Its focus was mainly on large customers, which contributed to 90% of its revenue.

The rest were SMBs and almost no small organizations. It is worth mentioning that for Datacraft even a 300-seat BPO is a small organization. From among the participants in the V&D100 survey, Wipro Infotech came from behind to lead the pack with a growth rate of 216% and a quarter of the market share. Among others, HP and Nokia did good business, and Nokia bringing in about Rs 2 crore from its network security services business.

The demand for network security will increase in the future. Adoption of security measure will be driven by increasing usage of data applications over corporate networks.

Alok Singh
aloksi@cybermedia.co.in