The condition you are describing looks like folliculitis
due to hair follicle inflammation
and getting infected.
As you are diabetic, I would suggest you to consult physician, if lump is becoming bigger and sore.
In that case you might need antibiotics to clear infection. Diabetics have tendency for not getting rid infections soon.
Keep area free of sweat, keep it clean. Shave the area to prevent recurrence.
Consult physician to get it treated.
I hope I have answered your query. In case of any doubt, feel free to revert back.