SecureWorks Finalizes Deal to Purchase VeriSign Managed Security Services Business

After a fledgling start in the SMB space 10 years ago, SecureWorks yesterday cemented its standing as a top-flight managed security services provider with its closing on the acquisition of the Managed Security Services division from VeriSign.

Announced this May, the deal brings much of VeriSign’s security business under the SecureWorks banner, but not all of it. VeriSign’s research arm, iDefense, will remain and be folded back into the company’s Internet domain business. Now that business is concluded, SecureWorks will operate with 500 employees and an anticipated annual revenue of $100 million.

“By focusing purely on security services and continuing high customer touch, this acquisition positions SecureWorks for further growth," said Irida Xheneti, security services research analyst at IDC, in a statement.

Though the acquisition by SecureWorks does involve consolidation on its own part, the divestiture by VeriSign is a bit of a countertrend to the tendency for larger IT services firms to pick up service providers in order to fill the security gap within their portfolios.

However, some security experts are not exactly surprised by VeriSign’s decision to wean itself off of its security services business.

“I think generally speaking that now is a pretty volatile time for this market,” says Ed Moyle analyst for Security Curve, who explains that there are two big dynamics at work in the security services market.

“The first one is that with the economic conditions such as they are there is definitely a crunch and a desire to move some of these (units) that are seen as sort of higher costs off of the table from a funding and cost-effectiveness point of view,” Moyle says. “At the same time the bar continues to ratchet higher and higher from a compliance perspective. So it is getting harder and harder to be in that business.”

Because VeriSign has such a strong standing in other markets, it likely made it easier to part with its managed service division, says Pete Lindstrom, analyst for Spire Security.

“Anytime you've got your fingers in multiple pots your level of loyalty is lower for all of them and there is more flexibility make some moves in a downturn,” he says. “I think this is what they're doing.”