View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
  2. Cybersecurity
February 17, 2022

Despite skills shortage, UK cybersecurity companies topped £10bn in 2021

As the UK's cybersecurity sector grows, businesses are still battling a talent shortage and need help to scale up.

By Matthew Gooding

Access to talent and the ability to scale-up remain significant challenges for UK cybersecurity companies as the sector grows. Businesses in the industry brought in revenue of £10.1bn in 2021 according to a new government report, a 14% year-on-year increase, as demand for services to battle the increasingly sophisticated cyber threats faced by organisations grows.

The ‘Cyber Sector Report’, published by the Department for Culture Media and Sport (DCMS), also shows that the sector contributed around £5.3bn to the UK economy in 2021, up from £4bn in 2020. DCMS says this is the largest increase since the report began in 2018.

Digital secretary Nadine Dorries said the government plans continued investment to help the sector go from strength to strength. “Hundreds of British firms from Edinburgh to Bristol are developing and selling cutting-edge cyber tools around the world that make it safer for people to live and work online,” Dorries said.

Challenges for UK cybersecurity companies

The report tracks the progress of 1,800 UK cybersecurity companies. As part of the study, researchers carried out a survey, interviewing a cross-section of 248 cybersecurity companies to discover their biggest business challenges. Though the fall-out from the Covid-19 pandemic remains the top concern, 46% of businesses cite competition for talent as their biggest hurdle, with 45% saying there is a lack of candidates on the market with the requisite skills.

Tech Monitor has reported on the shortage of cyber talent in the UK, which has been felt particularly keenly since the onset of the pandemic, with 43% of UK tech leaders polled by recruitment firm Harvey Nash stating they lacked the cybersecurity talent they required.

Funding for UK cybersecurity companies is growing

The other major challenge for UK cybersecurity companies survey was a lack of scale, with 46% of respondents saying they lacked the capacity to meet the demands of clients.

Content from our partners
Scan and deliver
GenAI cybersecurity: "A super-human analyst, with a brain the size of a planet."
Cloud, AI, and cyber security – highlights from DTX Manchester

The good news is that more funding is being put into cybersecurity businesses than ever before, with £1.4bn in private funding being raised for businesses, both dedicated and diversified, in the sector in 2021, up from just over £1bn in 2020. Diversified businesses are classified as those which offer other IT services beyond cybersecurity, while dedicated focus solely on their cyber activities.

Though this figure has increased, it remains a drop in the ocean compared to the amount of cash being invested in cybersecurity companies globally, with total venture capital investment around the world in cybersecurity during 2021 totalling $21.8bn according to data from Crunchbase. US companies attracted most of this money, with $17.4bn, followed by Israeli businesses ($1.8bn).

Levelling up in the cybersecurity sector has been limited

The government's levelling up agenda aims to spread job opportunities in high-growth areas such as cybersecurity around the country, with DCMS pledging £850,000 to help set up an organisation called the UK Cyber Cluster Collaboration, which is supporting the development of cyber business clusters. Several established clusters already exist across the UK regions.

But for the moment the industry remains focused on London and the South East. In 2021, 47% of UK cybersecurity companies were based in the area around the capital, a 1% increase on 2020. In the regions, there have been similarly small changes, the report says, with the North East growing its share of the market from 2%-3%, and the East Midlands from 4%-5%.

However, the authors note separate DCMS research on the cybersecurity labour market, published in December, "highlights the significant increase in remote job postings advertised in cybersecurity roles across the UK". This means, "the presence of local offices (or remote presence) could yet further expand as employers’ increasing neutrality towards staff location may allow for firms to enter new geographical regions," they say.

Homepage image by Georgii Boronin / iStock

Topics in this article :
Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.