PHISHING SIMULATOR MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The phishing simulator market size is estimated to be valued at US$ 93.30 Bn in 2023 and is expected to reach US$ 149.83 Bn by 2030, exhibiting a compound annual growth rate (CAGR) of 7% from 2023 to 2030. Phishing simulator is used to simulate phishing attacks in order to train employees to recognize malicious emails. It helps organizations test and strengthen their cyber defenses by running simulated phishing attacks. The key market drivers include increasing phishing attacks, growing cybersecurity awareness, need to protect sensitive data, and compliance requirements.

The phishing simulator market is segmented by deployment mode, end user, organization size, features, and region. By deployment mode, the market is segmented into cloud-based and on-premise. The cloud-based segment is expected to grow at a higher CAGR during the forecast period due to the low cost and flexibility offered by cloud-based solutions.

Phishing Simulator Market Regional Insights

• North America is expected to be the largest market for phishing simulator market during the forecast period, accounting for over 38% of the market share in 2022. The growth of the market in North America is due to the early adoption of cybersecurity solutions, presence of key players, and stringent regulations regarding phishing attacks.
• The Europe market is expected to be the second-largest market for phishing simulator market, accounting for over 24.5% of the market share in 2022. The growth of the market in Europe is due to the increasing penetration of phishing simulator solutions across SMBs and large enterprises.
• The Asia Pacific market is expected to be the fastest-growing market for phishing simulator market, with a CAGR of 8.5% during the forecast period. The growth of the market in Asia Pacific is due to the increasing awareness regarding phishing attacks and need for security solutions.

Figure 1. Phishing Simulator Market Share (%), By Region, 2023

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Phishing Simulator Market Analyst Viewpoint: The phishing simulator market is expected to witness significant growth over the forecast period driven by the increasing need among organizations to create cybersecurity awareness and enhance employee security training. Phishing continues to be one of the most common threats faced by companies and adopting phishing simulator solutions help identifies vulnerabilities. North America dominates the market due to stringent data privacy regulations and early adoption of cybersecurity measures among organizations in the region. However, the Asia Pacific region is expected to grow at the fastest pace due to the rapid digital transformation and increasing investments by businesses in the developing countries to protect themselves from cybercrimes. One of the key opportunities for phishing simulator providers is to offer customized training modules mimicking the techniques used by contemporary hackers. With remote working rising, there is also scope to integrate phishing simulator tools with other security awareness platforms. However, budget constraints, especially among small businesses, may restrain the growth to some extent. Data privacy laws in different countries also pose challenges for vendors in terms of localization and compliance. Established market players are focusing on partnerships and license-based pricing models to expand their footprint globally. Overall, the phishing simulator market is expected to grow steadily as cyber threats evolve and more enterprises prioritize security awareness of their workforce.

Phishing Simulator Market Drivers:

• Increasing sophistication of phishing attacks:  The phishing attacks landscape has evolved rapidly over the past few years. The phishing campaigns have become more targeted, persistent, and harder to detect. Hackers are using advanced techniques such as spear phishing, whaling, and business email compromise scams that are highly customized and evade traditional security defenses. Moreover, the COVID-19 pandemic has led to a further increase in phishing campaigns exploiting the remote working and dispersed workforce. These sophisticated phishing attacks are causing huge financial and reputational losses for enterprises. This is compelling organizations to adopt phishing simulation solutions that empower employees to identify and respond to the latest phishing techniques. For instance, in November 2023, the cyber defense firm Ironscales Ltd. from Israel has unveiled enhancements to its platform that is specifically designed to strengthen protection against the growing trend of image-centric phishing threats, which notably include attacks utilizing QR codes.
• Stringent regulatory and compliance requirements: With the increasing frequency and impact of cyberattacks, governance regulations around cybersecurity awareness training have become more stringent. Regulations such as HIPAA, PCI DSS, GLBA, SOX, and GDPR mandate periodic security awareness training, including phishing simulations for employees. Financial institutions like banks need to comply with anti-money laundering (AML) and KYC norms that require robust mechanisms to prevent frauds, including phishing. Adherence to compliance standards is a major factor driving the adoption of phishing simulators across enterprises.
• Increasing digitalization and remote working trends: Rapid digital transformation has dramatically increased the attack surface for organizations. Trends like BYOD, cloud migrations, and remote working have widened exposure to phishing risks. Remote workers are more susceptible to phishing attacks due to lack of security systems as compared to office networks. According to a survey, 35% employees admitted to clicking on phishing emails while working from home. As the remote working trend continues post-pandemic, organizations are deploying phishing simulators to train a wider employee base on phishing identification.
• Growing cybersecurity awareness: Growing number and impact of cyber incidents has led to an increase in cybersecurity awareness among businesses and individuals. According to various industry reports like Fortinet Research, around 80% organizations view cybersecurity training for employees as a high priority. There is greater understanding that technology alone cannot tackle phishing and human firewalls play a critical role. By providing phishing simulations and response training, organizations aim to develop a cyber smart culture and resilient workforce against evolving threats. The rising awareness is propelling the phishing simulator market.

Phishing Simulator Market Opportunities:

• Integration with new education techniques: The phishing simulator vendors have an opportunity to enhance their offerings by integrating new-age learning methods like gamification, simulations, and microlearning. Instead of just generic simulations, incorporating interactive and customized story-based phishing simulations can make training more engaging and contextual for employees. Gamifying the phishing tests by providing real-time feedback, leaderboard competitions, badges, and rewards can boost employee participation. Such education techniques can help improve phishing detection rates.
• Integration with MFA and other security tools: Phishing simulation providers can expand their capabilities by integrating with other security solutions like MFA, identity management, EDR, and SIEM offered by technology partners. This can help organizations take automated actions to isolate compromised users and devices detected via phishing tests. Integrations can also enable seamless data sharing, which can aid in identifying broader attack patterns. Joint solutions combining MFA, phishing prevention and phishing simulation can offer comprehensive protection against phishing. For instance, in October 2023, KnowBe4, home to the largest security awareness training and phishing simulation platform globally, introduced a new free resource known as the multi-factor authentication security assessment (MASA). This tool offers guidance to security experts on devising multi-factor authentication (MFA) strategies, as well as actionable recommendations for protecting against MFA breaches.
• Cloud-based delivery models: The phishing simulation market presents ample opportunities for cloud-based delivery models. SaaS-based solutions allow easy scalability to support a wider employee base. Cloud solutions enable organizations to instantly roll out phishing campaigns and training on the go. It also reduces hardware investments and allows easy access from anywhere. Companies with hybrid work models can especially benefit from cloud-based phishing simulators. Vendors can attract SMBs by offering cloud-based phishing simulators with customized options.
• Intelligence sharing and benchmarking: Phishing simulator vendors can provide additional value to clients by enabling threat intelligence sharing and benchmarking capabilities. By collectively analyzing simulation data from different organizations, broader phishing patterns, new attacker tactics and best practices can be identified. Customers can benefit by comparing their phishing resilience benchmarks with companies in their industry or location. Collaborative intelligence will enhance the phishing simulation offerings.

Phishing Simulator Market Trends:

• Use of automation and artificial intelligence (AI): The phishing simulation vendors are increasingly incorporating automation and AI capabilities in their solutions. Automated customization of phishing email templates and content helps create more realistic and contextual simulations aligned to emerging threats. AI is enabling faster campaign creation, attack pattern analysis, and response recommendations based on employees' behavior data. Chatbots are being used to engage employees for security training. AI capabilities provide scalability and reduce resource requirements for phishing simulations. For instance, in AUGUST 2023, Barracuda Networks Inc., a leader in cloud-based cybersecurity, unveiled a fresh report delving into the progression of malevolent applications of artificial intelligence. The document sheds light on the ways in which AI is being harnessed by cyber adversaries, as well as its role in thwarting attacks.
• Increasing adoption of security orchestration: Security orchestration platforms are emerging which allow phishing simulations to be integrated along with other security technologies like endpoint detection, identity management, and threat intelligence feeds. This enables coordinated prevention, detection, and automated response across attack vectors. Organizations benefit from end-to-end visibility of phishing risks via a single orchestrated console. Response playbooks allow one-click actions like isolating compromised users during phishing simulations. This rising trend improves return on investment (ROI) from phishing simulation tools.
• Emergence of managed security services: Organizations are increasingly relying on managed security services providers (MSSPs) for their phishing simulation and training needs. MSSPs have the in-house expertise to handle simulation campaign creation, launches, analysis and training. This alleviates the need for additional in-house phishing experts. MSSPs can optimize simulations by using threat intelligence from multiple clients. They can also provide ancillary services like security awareness education, dark web monitoring, cyber threat hunting, and others thus offering an integrated phishing defense.
• Integrated End user security education: Leading phishing simulation vendors provide integrated security awareness education covering company policies, password hygiene, social engineering red flags, and others along with the core simulations. E-learning modules with videos, quizzes, posters help employees absorb and retain best practices that are related to phishing. Nano-learning via periodic content snippets keeps security top of mind. Custom training is provided based on phishing response trends. This integrated education strengthens human firewalls against phishing.

Phishing Simulator Market Restraints:

Lack of expertise in managing simulations: While many organizations are seeking phishing simulation solutions, some are deterred by the lack of in-house skills to manage the campaigns and training. It requires expertise to create realistic scenarios mirroring latest attacker tactics, analyze response patterns, and provide contextual training. Lack of proper design and follow-up of phishing simulations dilutes their effectiveness. Organizations are hesitant to adopt phishing simulators due to resource constraints in managing simulations.

Counterbalance: To counterbalance the challenge availability of external expertise and support should be provided. Cybersecurity service providers or specialized consultants offer tailored solutions to guide organizations through the entire phishing simulation lifecycle. These external partners can provide guidance in creating realistic scenarios, analyzing results, and thus offering targeted training, bridging the gap caused by internal skill limitations.

Perceived disruption to employee productivity: Frequent phishing simulation campaigns, if not designed properly, can interrupt employees and affect productivity. Too many tests or lack of coordination across departments to avoid simulation overlaps can annoy employees. Lack of awareness on the rationale behind simulations may make some employees perceive it as unnecessary harassment. Organizations are therefore cautious in adopting phishing tools to avoid workforce disruption, which can be a market restraint.

Counterbalance: To counterbalance these concern strategic planning and effective communication needs to be undertaken. Organizations can mitigate disruptions by adopting a balanced approach to simulation frequency and scheduling, ensuring they align with employees' workflow. Prioritizing coordination among departments to avoid overlapping tests and providing clear communication regarding the purpose and significance of these simulations can significantly reduce employees' perception of harassment.

Budgetary constraints for cybersecurity: While organizations are aware of phishing risks, they face budget constraints in allocating resources to new solutions. This is especially true of SMBs that have limited security budgets amidst competing priorities. Many organizations consider technology solutions like email security gateways as sufficient defense against phishing. The perceived high costs of phishing simulators and low awareness among management about their ROI leads to low adoption budgets. This hampers the phishing simulation market growth. Despite budgetary limitations, organizations are increasingly recognizing the criticality of cybersecurity measures, particularly in mitigating phishing threats. To overcome financial constraints, companies are adopting strategic approaches like leveraging open-source or cost-effective simulation tools.

Recent Developments

New product launches

• In August 2023, IRONSCALES, the premier cloud-based email security platform safeguarding over 10,000 organizations globally, unveiled its summer '23 Release. This update includes the beta introduction of generative artificial intelligence AI)-enhanced phishing simulation testing (PST). This latest addition to the company’s AI offerings aims to facilitate quick customization of cybersecurity training for employees, addressing the sharp increase in socially engineered cyber threats.
• In February 2023, IRONSCALES, a forerunner in cloud-based email security solutions, introduced IRONSCALES Connect, a novel community hub created for cybersecurity professionals.
• In March 2023, KnowBe4 is a prominent cybersecurity company specializing in security awareness training and simulated phishing platforms unveils a phishing security toolkit that is aimed at battling the most prevalent method of social engineering.

Acquisition and partnerships

• In February 2023, KnowBe4, Inc., the operator of the largest platform for security awareness training and simulated phishing worldwide, recently finalized its sale to Vista Equity Partners, an investment company with a focus on enterprise software, data, and technology-driven enterprises, at a purchase price of US$24.90 per share in an all-cash deal.
• In August 2022, IRONSCALES is a cybersecurity company that focuses on providing an AI-driven email security platform designed to detect, respond to, and mitigate phishing attacks declared collaboration with the distribution firm Distology that is aimed at delivering extensive email security solutions throughout the U.K. and EMEA regions.
• In November 2021, KnowBe4 finalized the acquisition of SecurityAdvisor, reinforcing its strategy for advancing the future of the cybersecurity human defense layer.

Figure 2. Phishing Simulator Market Share (%), By Features, 2023

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Top Companies in Phishing Simulator Market

• Ironscales
• Cofense (PhishMe)
• Infosec Institute
• KnowBe4
• PhishLabs
• Wombat Security Technologies
• Barracuda Networks
• Mimecast
• Proofpoint
• CyberFish
• DataEndure
• FireEye
• Smooth Phish
• Votiro
• XM Cyber
• Lucidworks
• Digital Defense
• Getlabs
• Avanan
• Greathorn

Definition:  Phishing simulator market refers to the tools, platforms, and services that are used for simulating phishing attacks within an organization to train employees on how to detect and respond to actual phishing campaigns. It provides a safe environment for information security teams to send simulated phishing emails mimicking real-world phishing attacks and raise security awareness among employees.