Encryption Software Market Size and Share
Encryption Software Market Analysis by Mordor Intelligence
The encryption software market stood at USD 19.4 billion in 2025 and is forecast to advance to USD 43.9 billion by 2030, reflecting a 17.8% CAGR as organizations accelerate the shift to quantum-resistant security architectures. Rapid adoption follows the August 2024 release of the first three NIST post-quantum cryptography (PQC) standards and a 2035 federal deadline for PQC implementation, which together de-risk procurement decisions and unlock budget allocations.[1]National Institute of Standards and Technology, “FIPS 203, 204, 205: First Post-Quantum Cryptography Standards,” nist.gov Enterprises are embedding encryption across zero-trust frameworks mandated by U.S. Executive Order 14028, while the permanent hybrid workforce pushes cloud-native deployment models and distributed key management. Competition is intensifying as incumbent security vendors race against quantum-cryptography start-ups, with acquisitions filling capability gaps and platform integration emerging as a key differentiator. APAC’s surge, healthcare’s regulatory urgency, and a pivot from perimeter to data-centric protection all reinforce sustained expansion opportunities across the encryption software market.
Key Report Takeaways
- By component, software maintained 58% of encryption software market share in 2024, while services are projected to grow fastest at 21.1% CAGR to 2030.
- By deployment model, on-premise held 62% of the encryption software market size in 2024; cloud deployment is forecast to expand at a 24.8% CAGR through 2030.
- By function, disk encryption accounted for 33.4% of encryption software market size in 2024; cloud encryption is advancing at a 27.6% CAGR.
- By vertical, BFSI led with 30% revenue share in 2024, while healthcare is poised to rise at a 21% CAGR.
- By geography, North America captured 43% of encryption software market share in 2024; APAC is set to climb at a 20.2% CAGR.
Global Encryption Software Market Trends and Insights
Drivers Impact Analysis
Driver | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
---|---|---|---|
Stringent data-protection regulations | +4.2% | Global; EU & US lead | Medium term (2-4 years) |
Rising cyber-attacks on cloud workloads | +3.8% | North America & APAC | Short term (≤ 2 years) |
Remote & hybrid workforce needs | +3.1% | North America, EU | Medium term (2-4 years) |
Homomorphic encryption uptake | +2.4% | North America, EU | Long term (≥ 4 years) |
Quantum-resistant pilots | +2.1% | US & allies | Long term (≥ 4 years) |
Hardware root-of-trust for IoT | +1.6% | APAC hubs | Medium term (2-4 years) |
Source: Mordor Intelligence
Stringent Data-Protection Regulations
Global watchdogs now require proactive encryption mandates that embed security into digital infrastructure rather than treat it as a check-box exercise. The U.K. Information Commissioner’s Office updated guidance in May 2025, mandating algorithm-strength oversight that directly steers procurement choices. In the United States, Cybersecurity Maturity Model Certification 2.0 compels contractors to encrypt Controlled Unclassified Information in transit and at rest, widening the addressable encryption software market among federal suppliers.[2]Cybersecurity and Infrastructure Security Agency, “Software Acquisition Guide for Government Enterprise Consumers,” cisa.gov The Department of Justice’s Civil Cyber-Fraud Initiative raises financial penalties for non-compliance, turning encryption into a material risk-management imperative. Financial institutions supervising USD 23 trillion in assets face overlapping GLBA, SOX, and PCI-DSS mandates, each specifying encryption requirements, reinforcing multi-layered adoption across front-, middle-, and back-office systems. Together, these statutes contribute a 4.2% uplift to the forecast CAGR.
Rising Volume & Sophistication of Cyber-Attacks on Cloud Workloads
Attacks have shifted from opportunistic data theft to systematic “harvest-now-decrypt-later” campaigns that bank encrypted datasets for future quantum decryption. Canada’s National Cyber Threat Assessment 2025-2026 flags state-sponsored actors escalating AI-assisted campaigns targeting critical infrastructure.[4]Canadian Centre for Cyber Security, “National Cyber Threat Assessment 2025-2026,” cyber.gc.ca Enterprises answer with defense-in-depth strategies layering multiple encryption protocols and unified key hierarchies. Cloud encryption’s 27.6% CAGR reflects the urgency to protect multi-tenant workloads as ransomware evolves into double and triple-extortion assaults. Consequently, encryption becomes the final shield once perimeter defenses fall, fuelling integrated solution demand across hybrid environments.
Remote & Hybrid Workforce Fueling Endpoint-Level Encryption Demand
Distributed work dissolves fixed perimeters, forcing encryption onto every endpoint. SMEs, in particular, cite security and privacy concerns among chief cloud adoption hurdles, prompting demand for user-friendly encryption tools. Bring-your-own-device culture expands the diversity of endpoints, requiring encryption solutions that operate agnostic of ownership or network context. Zero-trust policies treat each device as potentially compromised, making endpoint-level encryption non-negotiable. Healthcare provides a prominent example: 92% of providers now use TLS for data flows and 87% have multi-factor authentication in place to secure remote electronic health records iaeme. The trend drives steady advance in unified data-at-rest and data-in-motion protection.
Homomorphic Encryption Adoption in Privacy-Preserving Analytics
Homomorphic encryption moves from academic theory to enterprise pilots, allowing analytics on encrypted data without exposing the plaintext. Banks apply the technology to fraud-detection algorithms that span multiple institutions, preserving client confidentiality while improving risk models. Healthcare research groups carry out federated genomic studies across hospitals without leaking patient data. Performance barriers shrink thanks to hardware acceleration and algorithmic refinements, making real-time encrypted computation feasible for advertising-tech analytics within evolving privacy laws. Cloud providers now position homomorphic encryption as a managed service, lowering entry hurdles for firms lacking deep cryptographic talent.
Restraints Impact Analysis
Restraint | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
---|---|---|---|
High TCO of full-disk encryption at scale | −2.8% | Global; SMEs hardest hit | Short term (≤ 2 years) |
Proliferation of open-source & pirated tools | −1.9% | APAC & emerging markets | Medium term (2-4 years) |
Source: Mordor Intelligence
High TCO of Full-Disk Encryption at Enterprise Scale
Total cost of ownership encompasses not just licensing but hardware upgrades, performance overhead, and specialist staffing. Post-quantum algorithms can impose 10-30% processing overhead, forcing infrastructure refresh cycles. Key management introduces further capital outlays for hardware security modules and segregated networks. Annual enterprise key-management budgets can range from USD 500,000 to USD 2 million, outstripping software fees. In latency-sensitive environments such as high-frequency trading, even microsecond delays translate into lost revenue, compelling expensive hardware acceleration. SMEs with limited budgets therefore delay or scale down broad encryption roll-outs, shaving 2.8% from the CAGR.
Segment Analysis
By Component: Services Surge Amid Quantum Transition
Services currently trail software yet register the steepest ascent as enterprises confront the 2035 PQC compliance horizon. The encryption software market size attributed to services will climb on a 21.1% CAGR, driven by demand for cryptographic asset inventories, algorithm migration roadmaps, and managed key-lifecycle oversight. Federal agencies earmark an estimated USD 7 billion for PQC transition services—an indicator of the consulting windfall in play. Software still secures recurrent revenue through subscriptions, but rising complexity favors turnkey managed offerings, especially within healthcare and finance where certified expertise and continuous compliance are mandatory.
At the same time, software vendors embed automated migration tooling, prompting vendors to bundle advisory services for differentiated value. This dual revenue track—license plus services—strengthens vendor lock-in, particularly where platform integration minimises operational friction. Over 60% of new deals scoped in 2025 combine software licenses with professional-service packages that cover discovery, remediation, and PQC-ready architecture validation. Consequently, partnerships between software publishers and global systems integrators are proliferating, helping both sides monetise the quantum shift inside the encryption software market.
By Deployment Model: Cloud Encryption Accelerates
Despite on-premise deployments commanding 62% of encryption software market size in 2024, cloud encryption climbs fastest at a 24.8% CAGR on the back of hybrid architectures and federal cloud-first mandates. Government agencies implementing zero-trust frameworks require scalable key management that spans public-, private-, and multi-cloud estates gsa. Small and mid-sized enterprises favour cloud subscriptions to sidestep capital outlays and access enterprise-grade security on demand, aligning with operational efficiency gains noted in 82% of SME studies businesses.
On-premise solutions retain appeal where data sovereignty or ultra-low latency demands prevail, such as regulated banking workloads and high-frequency trading platforms. Yet cloud providers now offer Hardware Security Module-as-a-Service and confidential-computing enclaves, eroding legacy objections to off-premise key custody. Cloud-native encryption enables rapid policy propagation across containers and serverless functions otherwise hard to cover with traditional disk encryption. As a result, the encryption software market witnesses a secular tilt towards flexible SaaS models while hybrid adoption ensures on-premise tools remain relevant, albeit at a slower growth pace.
By Enterprise Size: SMEs Embrace Cloud-First Encryption
Large enterprises hold 68% revenue share, reflecting complex multi-layer deployments and deep compliance obligations. Still, SMEs are the fastest-expanding cohort at 23.1% CAGR, empowered by user-friendly cloud services that abstract cryptographic complexity. Surveyed SMEs highlight phishing, ransomware, and insider abuse as top threats, with encryption cited among preferred safeguards to fulfil customer trust commitments jis.
However, cost and skills gaps persist. Providers therefore package encryption with managed detection and response, automating key rotation and audit reporting. Vendors targeting the SME channel emphasise rapid onboarding, subscription pricing, and compliance templates aligned to PCI-DSS and HIPAA. Meanwhile, large enterprises drive custom integration projects that stitch encryption into legacy ERP and data-warehouse environments, leveraging vendor professional services at scale. The two-speed demand underscores why portfolio breadth—from entry-level SaaS to bespoke on-premise modules—remains pivotal for capturing share across the encryption software market.

By Function: Cloud Encryption Leads Innovation
Disk encryption continues to top revenue at 33.4%, yet its share will erode as organisations pivot to the cloud. Cloud-specific encryption is forecast to outstrip every other function at a 27.6% CAGR, buoyed by containerised workloads and the need for granular, data-centric protection. Communication encryption supports remote work, while database encryption advances steadily under zero-trust mandates. Vendors increasingly bundle multi-function capabilities under a unified management plane, curbing console sprawl and easing compliance audits.
Emerging homomorphic encryption and secure multi-party computation modules extend functional scope, letting users process encrypted datasets without decrypting them. Demand is strongest in regulated analytics—fraud scoring, collaborative healthcare research—where data sensitivity precludes plaintext sharing. Consequently, R&D pipelines concentrate on performance optimisation to make advanced encryption practical for latency-intensive use cases, cementing function-level diversification as a growth catalyst within the encryption software market.
By Industry Vertical: Healthcare Drives Regulatory Compliance
BFSI retains the largest wallet share, but healthcare records the highest trajectory at 21% CAGR. HIPAA revisions and telehealth expansion require end-to-end protection of electronic health information, boosting TLS adoption to 92% and MFA usage to 87% within provider networks. Hospitals also gravitate toward homomorphic encryption for multi-institutional research in genomics and drug discovery, safeguarding patient privacy while enabling large-scale analytics.
Government adoption rises alongside PQC mandates, while IT-telecom sectors pioneer edge-to-cloud encryption for 5G rollout. Retail and education display steady uptake as e-commerce and digital-learning channels widen attack surfaces. Vertical demand therefore aligns to the regulatory burden and digital-transformation velocity, not the fundamental need for confidentiality, underscoring a broadening opportunity pool for vendors across the encryption software market.
Geography Analysis
North America leads at 43% market share, fortified by early zero-trust adoption and a robust vendor ecosystem. The region benefits from the National Quantum Strategy, which allocates CAD 360 million (USD 267 million) to post-quantum cryptography R&D and aims to deliver a secure quantum communication network.[3]Government of Canada, “National Quantum Strategy Roadmap: Quantum Communication and Post-Quantum Cryptography,” canada.ca State legislatures are equally active, with 75 cybersecurity bills enacted in 2024 alone, driving encryption procurement within the public sector.
APAC, climbing at 20.2% CAGR, reflects rapid digitisation in manufacturing, finance, and healthcare plus accelerating regulatory frameworks in Japan, South Korea, and Singapore. The region’s semiconductor dominance advances hardware-root-of-trust shipments yet also reveals supply-chain fragility, spurring interest in software-only encryption that mitigates component shortages. Europe grows at a steady clip under GDPR compliance and new U.K. guidance that stresses algorithm-strength governance, reinforcing encryption’s role in digital sovereignty. Collectively, these trends map a geographic landscape where leadership in policy, supply chains, and cloud adoption determines regional momentum within the encryption software market.
Europe’s trajectory aligns to data localization and privacy priorities. Renewed focus on homomorphic encryption facilitates cross-border analytics without breaching GDPR. Member states coordinate quantum-safe pilot projects to protect critical infrastructure, driving procurement of PQC-enabled email gateways and VPNs. Brexit imposes data-transfer complexity, making encryption essential for U.K.–EU commerce. Fragmented national regulations create opportunity for vendors offering policy-aware key management capable of adapting to differing retention and disclosure rules.

Competitive Landscape
Encryption remains a moderately fragmented field where established giants and nimble specialists collide. IBM, Microsoft, and Broadcom leverage existing customer footprints and broad security suites, cross-selling encryption modules bolstered by cloud, identity, and analytics offerings. Quantum-specialist start-ups such as Arqit advance differentiated intellectual property on symmetric key-agreement protocols, drawing interest from defense and telco clients. Patent filings around hybrid PQC algorithms and quantum-secure communication channels underscore mounting barriers to entry.
Acquisition momentum reflects strategic gaps: Arqit’s May 2025 purchase of Ampliphae’s encryption-visibility technology augments its quantum-safe portfolio. NetSfere launched the first enterprise-ready ML-KEM 1024 communication platform, targeting regulated industries with immediate PQC compatibility. Vendors now compete on platform integration—unified key orchestration across SaaS, IaaS, and on-premise assets—rather than isolated point solutions. Industry-specific templates for HIPAA, PCI-DSS, and CJIS bolster value propositions, especially among SMEs seeking turnkey compliance. Artificial-intelligence-driven policy automation further differentiates offerings by cutting operational overhead and addressing the high TCO restraint shadowing the encryption software market.
Consolidation is expected as cash-rich incumbents acquire algorithm innovators to fast-track PQC portfolios. Meanwhile, open-source communities pressure pricing on commoditized components, encouraging premium vendors to double down on managed services and regulatory expertise. Success hinges on the ability to deliver end-to-end encryption lifecycle management—from discovery and inventory through migration and continuous audit—across heterogeneous customer estates.
Encryption Software Industry Leaders
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IBM
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Microsoft
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Broadcom Inc.
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Sophos Ltd.
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Thales
- *Disclaimer: Major Players sorted in no particular order

Recent Industry Developments
- May 2025: Arqit Quantum Inc. acquired Ampliphae’s technology IP to integrate encryption-visibility tools into its quantum-safe platform
- April 2025: Arqit Quantum Inc. launched a confidential-computing-enhanced quantum-safe encryption service built on Intel Trust Domain Extensions, adding rapid key rotation and data-sovereignty controls
- March 2025: NetSfere debuted an enterprise-ready quantum-proof communication platform using ML-KEM 1024 encryption
- March 2025: The Government of Canada allocated CAD 360 million (USD 267 million) to quantum-communication and PQC initiatives under the National Quantum Strategy
Global Encryption Software Market Report Scope
Organizations utilize encryption software to protect data transfers between remote locations. The primary objective of encryption software is to shield data from unauthorized access. Furthermore, a growing number of businesses worldwide are adopting encryption in response to heightened concerns over data security and the need to comply with privacy regulations.
The Encryption Software market is segmented by component (software, service), by deployment model (on-premise, cloud), by enterprise size (large enterprises, small and medium enterprises), by function (disk encryption, communication encryption, file/folder encryption, cloud encryption, database encryption), by industry vertical (IT & telecommunication, BFSI, healthcare, government, retail, education), and geography (North America, Europe, Asia Pacific, Middle East and Africa, Rest of the World). The report offers market forecasts and size in value (USD) for all the above segments.
By Component | Software | ||
Service | |||
By Deployment Model | On-premise | ||
Cloud | |||
By Enterprise Size | Large Enterprises | ||
Small and Medium Enterprises | |||
By Function | Disk Encryption | ||
Communication Encryption | |||
File/Folder Encryption | |||
Cloud Encryption | |||
Database Encryption | |||
By Industry Vertical | IT and Telecommunication | ||
BFSI | |||
Healthcare | |||
Government | |||
Retail | |||
Education | |||
Others | |||
By Geography | North America | United States | |
Canada | |||
Mexico | |||
South America | Brazil | ||
Argentina | |||
Rest of South America | |||
Europe | United Kingdom | ||
Germany | |||
France | |||
Italy | |||
Spain | |||
Rest of Europe | |||
Asia-Pacific | China | ||
Japan | |||
India | |||
South Korea | |||
Australia | |||
Rest of Asia-Pacific | |||
Middle East | Saudi Arabia | ||
United Arab Emirates | |||
Turkey | |||
Rest of Middle East | |||
Africa | South Africa | ||
Nigeria | |||
Egypt | |||
Rest of Africa |
Software |
Service |
On-premise |
Cloud |
Large Enterprises |
Small and Medium Enterprises |
Disk Encryption |
Communication Encryption |
File/Folder Encryption |
Cloud Encryption |
Database Encryption |
IT and Telecommunication |
BFSI |
Healthcare |
Government |
Retail |
Education |
Others |
North America | United States |
Canada | |
Mexico | |
South America | Brazil |
Argentina | |
Rest of South America | |
Europe | United Kingdom |
Germany | |
France | |
Italy | |
Spain | |
Rest of Europe | |
Asia-Pacific | China |
Japan | |
India | |
South Korea | |
Australia | |
Rest of Asia-Pacific | |
Middle East | Saudi Arabia |
United Arab Emirates | |
Turkey | |
Rest of Middle East | |
Africa | South Africa |
Nigeria | |
Egypt | |
Rest of Africa |
Key Questions Answered in the Report
What is the encryption software market worth today and how fast is it growing?
The market stands at USD 19.4 billion in 2025 and is forecast to reach USD 43.9 billion by 2030, posting a 17.8% CAGR.
Which deployment model is expanding most quickly?
Cloud-based encryption leads with a 24.8% CAGR through 2030 as organizations migrate workloads to hybrid and multi-cloud environments.
Why is healthcare showing the highest vertical growth?
Updated HIPAA rules, rapid digitization, and the need to secure telehealth data are propelling healthcare encryption at a 21% CAGR.
How do U.S. federal mandates influence adoption rates?
Executive Orders 14028 and 14144, plus a 2035 deadline for post-quantum cryptography, require end-to-end encryption across federal systems and their supplier networks, accelerating market demand.
Which region will grow fastest over the next five years?
Asia-Pacific is projected to expand at a 20.2% CAGR, driven by rapid digital transformation and tightening data-protection regulations across major economies.