Snowden, PRISM fallout will cost U.S. tech vendors $47 billion, less than expected

Summary:Forrester Research said the revenue hit to U.S. cloud and outsourcing providers is less than initial projections because international customers upped security instead of leaving.

Spying by the National Security Agency will cost cloud and outsourcing providers about $47 billion in revenue over the next three years, but that sum is better-than-expected, according to a Forrester Research analysis.

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In 2013 and 2014, the NSA's PRISM program, a massive Internet spying operation, was outed by Edward Snowden. As reports continually surfaced about the NSA's programs, large tech vendors began to see a hit. Officially, the NSA wasn't blamed, but multiple U.S. tech giants noted business tanked in China and other key markets.

It's official: NSA spying is hurting the US tech economy

What Forrester found is that the PRISM program has hurt U.S. cloud providers, but traditional outsources are taking the biggest hit. For instance, cloud providers will lose about $500 million in revenue between 2014 and 2016. Most international companies have stuck with U.S. providers, but are taking control of security and encryption, said Forrester analyst Ed Ferrara in a report.

Forrester's report noted:

The biggest difference between initial worst-case projections in 2013 of revenue loss of $180 billion and the current $47 billion projection is that customers took encryption into their own hands, said Forrester.

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Snowden, PRISM fallout will cost U.S. tech vendors $47 billion, less than expected