Data Classification Market by Component, Methodology, Application, End-User Industry, & Region for 2026-2032

Data Classification Market Valuation - 2026-2032

The growing requirement for businesses to handle enormous volumes of data effectively and securely, along with the possibility of data breaches and mounting regulatory challenges, is propelling the data classification market's substantial expansion. According to the analyst from Verified Market Research, the data classification market is estimated to reach a valuation of USD 9486.25 Million in 2032 over the forecast subjugating around USD 1664.66 Million valued in 2024.

The increasing demand for reliable data management solutions that assist businesses in adhering to strict regulations, protecting confidential data, and optimizing data usage is fueling the data classification market's rapid expansion. These solutions enable businesses to make well-informed decisions while lowering the risk of data breaches and mismanagement. It enables the market to grow at a CAGR of 24.3% from 2026 to 2032.

Data Classification Market: Definition/ Overview

Data classification is the systematic organization of data into groups based on kind, sensitivity, and relevance, allowing for more efficient management, protection, and retrieval. This method is critical for guaranteeing regulatory compliance, improving data security, and facilitating risk management since it allows enterprises to implement appropriate security measures based on the categorization level of the data.

Furthermore, data classification has a wide range of applications, including cybersecurity, where it aids in the determination of access controls and protection policies; compliance management, which ensures adherence to legal standards such as GDPR; and operational efficiency, as it streamlines data handling processes and eliminates redundancy.

What Factors are Propelling the Growth of the Data Classification Market?

The increasing amount of data breaches is prompting firms to build strong data classification systems. According to the Identity Theft Resource Center's 2021 Annual Data Breach Report, there were 1,862 data breaches in 2021, more than the previous record of 1,506 set in 2017. This marks a 68% increase over the 1,108 breaches reported in 2020.

The transition to cloud computing necessitates improved data classification for security and compliance. Gartner anticipates that by 2025, more than 95% of new digital workloads will be implemented on cloud-native platforms, up from 30% in 2021. This tremendous transition is increasing the demand for improved data classification technologies to manage and secure data in cloud environments.

Furthermore, the increasing regulatory obligations require companies to employ data classification systems. According to the European Union Agency for Cybersecurity (ENISA), over 281,000 data breach notifications have been received across Europe since the GDPR went into effect in 2018. This has resulted in fines of more than €1.29 billion, stressing the importance of correct data classification to ensure compliance and avoid penalties.

What are the Key Obstacles Hindering the Growth of the Data Classification Market?

The lack of qualified experts in the field of data classification is an obstacle for the data classification market. The complexities of developing successful data classification systems necessitate knowledge of data management and security measures. However, the existing talent gap makes it difficult for enterprises to locate qualified staff capable of designing and managing these systems successfully, thereby contributing to delays and inefficiencies in data classification initiatives.

Furthermore, the high costs of implementing data classification systems are prohibitive for many companies, particularly small and medium-sized businesses. The cost of modern technologies, continuous maintenance, and staff training put a strain on budgets, prompting organizations to delay implementing complete data classification strategies, thereby limiting market growth.

Category-Wise Acumens

How Does the Increasing Demand for Advanced Data Management Drives the Demand for Data Classification Solutions?

According to VMR analysis, the solutions segment is estimated to hold the largest market share during the forecast period. The growing demand for better data management skills is one of the factors driving this dominance. Organizations are looking for comprehensive solutions that not only categorize data but also integrate smoothly with existing systems, resulting in improved data governance and compliance. The desire for strong solutions that improve operational efficiency and security fuels the expansion of the solutions segment.

Concerns about data security and regulatory compliance are becoming more and more of a driver. As businesses confront the increased dangers of data breaches and severe regulations, they prioritize the installation of advanced data classification systems. These solutions assist firms in identifying and protecting sensitive information, establishing trust, and assuring legal compliance, which adds considerably to the segment's growth.

Furthermore, the growing growth of unstructured data is driving the solutions segment ahead. With the increasing number of data generated daily, organizations need excellent classification solutions to properly manage, retrieve, and utilize this data. The ability of these technologies to categorize large amounts of unstructured data into meaningful classifications improves data accessibility and security, cementing their market dominance.

What Factors Contribute to the Demand of Data Classification for Access Control?

The access control segment is estimated to dominate the data classification market during the forecast period. The growing prevalence of cyberattacks and data breaches, which force businesses to adopt strict access control procedures, is one factor contributing to this dominance. Businesses can reduce the risk of unauthorized access by classifying data based on sensitivity, ensuring that only authorized workers can view or change sensitive information.

The expanding regulatory environment, which requires stringent data protection procedures, is another driver. Regulations such as GDPR and HIPAA require enterprises to classify data to comply with legal standards. The need for compliance drives the demand for access control solutions, which assist firms in categorizing data properly and implementing the essential security processes to protect sensitive information.

Furthermore, the growth of remote work and cloud-based services has increased the demand for strong access control measures. As organizations rely more on digital platforms to run their operations, the ability to classify and limit data access becomes crucial. This transition not only increases security but also operational efficiency, reinforcing the access control segment's market leadership.

Country/Region-wise Acumens

How Does the High Incidence of Data Breaches Propel the Dominance of North America in the Market?

According to VMR Analyst, North America is estimated to dominate the data classification market during the forecast period. North America, particularly the United States, has a high rate of data breaches, necessitating the implementation of effective data classification technologies. According to the Identity Theft Resource Center's 2021 Annual Data Breach Report, the United States alone saw 1,862 data breaches in 2021, affecting more than 293 million people. Because of the rising frequency of breaches, enterprises are using advanced data classification systems to protect sensitive information.

Furthermore, North America has enacted a variety of data protection standards, mandating the usage of data classification technologies. The California Consumer Privacy Act (CCPA), which went into effect in 2020, affects more than 500,000 businesses in the United States alone. According to TrustArc's CCPA readiness survey, 79% of organizations reported spending over $100,000 on compliance, with 53% spending more than USD 1 Million, showing significant investment in data management and classification tools.

What are the Potential Factors that Drive the Growth of the Market in Asia Pacific?

The Asia Pacific region is estimated to exhibit the highest growth within the market during the forecast period. The Asia Pacific region is undergoing rapid digital expansion, increasing data that must be identified and handled. According to IDC, the volume of data created in the Asia Pacific region is predicted to increase from 5.9 zettabytes in 2018 to 102.6 zettabytes in 2025, reflecting a 50% compound annual growth rate (CAGR). The tremendous increase in data volume is increasing the demand for robust data classification solutions.

The region is experiencing an increasing number of cybersecurity events, needing improved data classification for protection. The 2021 IBM Cost of a Data Breach Report discovered that the average overall cost of a data breach in ASEAN countries was USD 2.71 Million. In particular, India saw a 9.4% increase in the average cost of a data breach from 2020 to 2021, reaching USD 2.21 Million. These rising costs are pushing organizations to invest in data classification technologies.

Furthermore, many Asia-Pacific countries are developing or improving data protection legislation, which is pushing the adoption of data classification systems. For example, China's Personal Information Protection Law (PIPL) went into force in November 2021, affecting an estimated 1.4 billion individuals. Similarly, India's proposed Personal Data Protection Bill would have an impact on its population of more than 1.3 billion. These requirements require firms to establish extensive data classification procedures to ensure compliance.

Competitive Landscape

The competitive landscape of the data classification market is characterized by a varied range of companies utilizing a variety of techniques to increase market presence and growth. Companies are increasingly focused on innovation, adopting new technologies like artificial intelligence and machine learning to increase the accuracy and efficiency of data classification procedures.

Some of the prominent players operating in the data classification market include:

OpenText

Covata

Varonis

Innovative Routines International (IRI)

Informatica

Dataguise

Spirion

Digital Guardian

Amazon Web Services (AWS)

Boldon James Ltd

Latest Developmentsc

In July 2023, Spirion announced new AI-driven data classification tools to improve sensitive information management and security across diverse data contexts.

In June 2023, Varonis launched new features to automate data classification and risk mitigation, reducing the risk of data breaches and ensuring regulatory compliance.