Government Spying Will Cost US Vendors Fewer Billions Than Initial Estimates

Is Edward Snowden's unveiling of the US National Security Agency's PRISM spying program ruining the fates of US cloud, hosting, and outsourcing businesses as international customers walk away from any vendor within the agency's reach? Forrester's first survey of these customers about the effects of PRISM suggests a significant financial impact, but not to the degree speculated in 2013. Our analysis of the pullback by non-US enterprise spending on US-based cloud and outsourcing vendors suggests an overall three-year loss in potential revenues of $47 billion. Traditional outsourcers are feeling the brunt of this impact. Lost revenue from spending on cloud services and platforms comes to just over $500 million between 2014 and 2016. While significant, these impacts are far less than speculated, as more companies reported taking control of security and encryption instead of walking away from US providers. US-based CIOs need not worry that the fallout of PRISM will cripple US cloud vendors, and CIOs outside the US should understand that there are options besides avoiding these US vendors.