Why are layoffs rife in the cybersecurity space?

Cybersecurity vendors have spoken out about layoffs in the sector

The threat of cyberattacks is ever present, with data from AAG-IT highlighting 3,809,448 records are stolen from breaches every day.

As a result, private and public sector demand for cybersecurity products is high, with grand view research predicting the cybersecurity market will be worth $500.70bn by 2030.

But while there is a demand in the industry, not everything is hunky-dory, with tech stocks having taken a beating in 2022 with markets continuing to dip.

Valuations have been slashed in both the public and private markets, with companies that benefited from the Covid-19 pandemic getting hit harder than others.

As a result, some cybersecurity firms have begun laying off workers. For example, security vendor OneTrust reduced its workforce by 950 employees as it announced a reorganisation of the company.

And Automox also recently confirmed in a LinkedIn post that it has "parted ways" with multiple people, saying it is not "immune" to the challenges of the macroeconomic environment.

Security vendors have recently spoken to CRN about the layoff situation and if they are at all affected.

Keith Weatherford, VP of worldwide channel sales at Forescout, said smaller companies are affected as capital is becoming harder to get with rates going up.

He said: "When you have a fragmented market the focus is always on the growth, it's not on profitability. When you focus heavily on growth and you out spin your bottom line and you're relying on capital in the market to be freely available and your ability to raise money to be easy, you can go do that.

"Now, in this market, we're seeing interest rates increase at a rapid pace. In the US our Federal Open Market Committee just raised rates by 75 basis points.

"As rates go up, capital is going to become harder to get access to.

"So for a lot of these smaller companies, they're going to have to lay off now to hold cash and make sure that they can survive. So that's what I think we're seeing just economically in the market."

He added that Forescout is watching its headcount as more acquisitions are made but has zero plans for layoffs.

Weatherford added: "When we make acquisitions we have to make sure that we're still staying committed to our profitability focus. We're watching headcount, just as we acquire a lot of new headcount through the acquisitions, but we have zero plans for layoffs. So we're in a really good spot."

Meanwhile, Jonathan Whitely, who heads up the UK business and channel for Watchguard, also said the company has no plans for layoffs and that while there is "economic uncertainty", cyber security usually remains "resilient".

He also said the pandemic has changed the way people work which as a result has forced companies to change the way organisations protect themselves, meaning increased investment is needed.

Whitley said: "The pandemic really accelerated this whole move towards hybrid working and home work environments and that fundamentally changed how organisations need to protect themselves.

"Nowadays, most workers are working on maybe a day or two days a week from home and people are having to put into place additional layers of security that they perhaps didn't have to think about before."

Florian Malecki, executive vice president of marketing at Arcserve, said he could not comment on what other vendors are doing but said organisations have been investing into a variety of solutions including firewalls and next generation anti-virus software.

"However, they need to rebalance the investment between the prevention solutions and the remediation solutions, such as backup recovery, immutable storage, and forensic is part of that," he said.

"When you have been breached, you do everything you can to recover the data."