Defense Cyber Security Market Size, Share, Russia-Ukraine War Impact Analysis, By Platform (Software & Service and Hardware), By Solution (Cyber Threat Protection, Threat Evaluation, Content Security, and Others), By Type (Critical Infrastructure Security & Resilience, Application Security, Cloud Security, and Others), By End User (Land Force, Naval Force, and Air Force), and Regional Forecast, 2023-2030

The global defense cyber security market size was valued at USD 14.20 billion in 2022 and is projected to grow from USD 16.45 billion in 2023 to USD 46.00 billion by 2030, exhibiting a CAGR of 15.80% during the forecast period.

Defense cyber security refers to cyber security solutions used by the defense sector to monitor, detect, report, and counter cyber threats, which are internet-based attempts to compromise sensitive data via spyware and malware as well as phishing to ensure data confidentiality. During the past years, the defense industry has seen rapid development. The defense industry worries about threats beyond traditional insurgent activity.

For the defense industry, dependable and improved cyber security network solutions have become essential due to developments in information technology, the upgraded weapons and increase in volume of classified data. Increased demand for cyber security services or solutions for several applications in defense or military sectors is expected to drive the growth of the global market size from 2023 to 2030.

RUSSIA-UKRAINE WAR IMPACT

Russia-Ukraine War Positively Impacts Market Due to Increasing Military Expenditure on Cyber security for Combat Operations

The Russia-Ukraine war leads to increasing defense expenditures and strengthening defense forces both from NATO countries and globally. Most European countries have increased their military spending after Russia’s invasion of Ukraine. For instance, as per Stockholm International Peace Research Institute (SIPRI) report, Ukraine's military spending increased by almost 640% in 2022 from the last year, and also global military spending increased by 3.7% to USD 2.24 trillion in 2022.

Poland is always the target of Russian cyber operations as Poland has taken in the most refugees, served as the key logistical conduit for military and humanitarian aid to Ukraine, and led the charge for tough sanctions against Russia. As per Microsoft report, in November 2022, the hacker group ‘Sandworm’, affiliated with the Russian intelligence office GRU was using a new ransomware called ‘Prestige’ to target Ukrainian and Polish logistical networks. Since the start of the war in Ukraine, these strikes are some of the first ones that specifically target NATO countries and are state-sponsored by Russia.

The Russia-Ukraine conflict is boosting EU-NATO collaboration regarding partner nations' security and defense in the areas of education, training, situational awareness, and exercises about cyber defense. Also, it is strengthening the bonding with nations that share the same views, especially when it comes to building resilient and effective cyber defenses to increase support for partners in developing their cyber defense capabilities, particularly EU candidate nations, including through the European Peace Facility (EPF).

LATEST TRENDS

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Autonomic and Adaptive Cyber Defense Algorithm to Prevent the Dynamic Cyber-Attacks

The rate of investment in cyber security in the defense business has increased as well as charges of one country attacking another for political reasons and increasingly sophisticated cyberattacks. Governments and organizations are increasing their investments in cyber security in these unsettling times of defense goods and services than ever before.

For cyber defense to function efficiently in dynamic operating contexts, it must be autonomous and adaptive. Using an evaluation of a given system, autonomous and adaptive algorithms alter certain cyber security control behaviors. The defender alters cyber defenses on the go, making them more complex and expensive for the attacker. Moving Target Defenses (MTD), artificial diversity defense, and bio-inspired defenses are examples of common Adaptive Cyber Defense (ACD) strategies.

Adaptive multi factor authentication, adaptive or dynamic routing algorithms are the recent developments of this concept. For instance, in March 2023, MITRE, a non-profit organization and researchers at UL Lafayette, teamed up to solve a crucial issue in cyber resilience optimization.

DRIVING FACTORS

Rising Prevalence of Cyber-Attacks in the Defense Sector to Catalyze the Market Growth

The rising threat of cyber-attacks to important resources by systematized cyber criminals and advanced technical training in the cyber security market drives the market. As per the checkpoint software analysis mentioned in Forbes, the number of cyber-attacks reported in 2022 is 38% higher than the total volume of attacks in 2021. The weekly average number of attacks per organization reached 1168 whereas government and military are in second place with 1661 attacks per week.

With the potential of high risks, any cyber-attack in the national defense sector can damage the country’s reputation and financial position in the world book. Increasing cyber-attacks supported by political parties or resourceful individuals also fuel the market growth. For instance, in February 2023, the cyber gang Lazarus, sponsored by the North Korean government, conducted an espionage campaign and stole approximately 100GB of data from several sectors, such as healthcare, defense, energy, and a leading research university.

Also, due to technological advancement, cyber-attack techniques are enhancing daily from phishing, virus, and worms to Zero-day attacks, Dynamic Trojan Horse Networks (DTHN) Internet worms, and Distributed Denial of Service (DDOS). At the same time to defend against these modern attacks, cyber security professionals should be prepared at all times.

Digital Transformation and Automation in the Global Defense Sector to Propel Market Growth

Digitalization and Artificial Intelligence (AI) in empowering warfighters to get the technological advantage in the military or defense sector is also a key driving factor for the market growth. The increasing number of digital equipment needs to be secured from the networks, storage, and applications side. For instance, in FY 2024, the U.S. Department of Defense (DoD) invested USD 13.5 billion to continue the Digital Modernization Strategy (DMS) in cyberspace.

Long-range, long-duration unmanned wireless devices are becoming more autonomous in real time and space. Depending on the use cases, operations may be carried out under various supervision levels, ranging from intense monitoring (remotely operated drones) to very little information sharing (autonomous drones). Cyber security is an essential tool in the global defense sector to secure this operation.

The adoption of cloud and cognitive computing, enhanced delivery, the introduction of new cutting-edge technology such as wearable technology, advanced Positioning, Navigation and Timing (PNT), optimized route determination, and improved situational awareness have come under AI and the Internet of Things (IoT), which drive the market to make these systems more reliable. For instance, in 2023, the defense ministry of India signed a deal of USD 3.8 billion with defense public sector undertakings, Brahmos Aerospace and Cochin Shipyard, to increase armed forces' capabilities with advanced military hardware and software solutions.

RESTRAINING FACTORS

Lack of Skilled Human Resources and High Cost of Training May Hamper the Defense Cyber Security Market Growth

There is a significant gap between cyber security workforces' supply and demand sides across every sector. Cyber-attack techniques are changing and updating daily, so defense workforces must be updated to overcome any modern software or system loophole.

There is a shortage of security awareness experts who can provide appropriate scheduled training to government employees about data sharing and confidentiality policies. The lack of interest among younger generations in cyber security has been cited as another factor fueling the crisis in job demand. As per the report, in 2022, there is a global shortage of 3.4 million workers across the world and there are more than 0.7 million unfilled defense cyber security jobs in the U.S. alone.

Huge investment from governments is needed to train military personnel about the dangers of cyber security. To strengthen defense cyber security functions that develop the cyber workforce, the cyber security training fees for students vary from USD 18,000 to USD 34,000. However, for working employees, the training cost hiked up to USD 112 thousands. For instance, Japan government made a huge investment of approximately USD 16.68 million to train personnel in defense cyber security only in the 2023 defense budget while most of the developing countries faced difficulties to allocate a huge cyber security training price for defense employees.

SEGMENTATION

By Platform Analysis

Software & Service is Anticipated to Command the Market Owing to Digitizing the Defense Operational Process

By platform, the market is bifurcated into hardware and software & service. Software & service segment dominated the market share in 2022 and is projected to grow at the highest CAGR in the study period. This is attributable to key companies' increasing adoption of on premise and cloud-based defense platforms. In addition, the increasing importance of software in digitizing the military operational processes is anticipated to propel the segment’s growth.

The hardware segment's growth can be attributed to the rising defense Information Technology (IT) infrastructure modernization programs by governments of countries such as the U.S, China, Japan, India, and so on. The rising cyber threats in the military sub-systems are compelling several countries' governments to strengthen their defense cyber security services by collaborating with key service providers. Hence, this will propel the market growth during the forecast period.

By Solution Analysis

Cyber Threat Protection Segment is Dominating Owing to the Implementation of Plans to Prevent Possible Cyber-Attacks

By solution, the market is segregated into cyber threat protection, threat evaluation, content security, and others. The cyber threat protection segment is dominating the market and is also anticipated to grow at the highest CAGR during the forecast period. Security solutions in the cyber threat protection category are created to assist security professionals in defending systems and networks against malware and other specialized cyberattacks. Such assaults aim to infiltrate networks or systems to interrupt services or steal data, frequently to benefit the attackers financially. Several types of cyber threat protection include firewalls, sandboxing, TSL/SSL inspection, and browser isolation.

Content security holds the second position in the market of defense cyber security. Cross-Site Scripting (XSS) and data injection assaults are two examples of threats that content security helps to detect and counter. Content Security solution includes E-mail encryption and web security of the traffic. Adoption of cloud services or solutions to propel on the digitalization era is the key focus of organizations in both big and medium-sized firms. The market for content security grew quickly as more companies migrated to cloud computing for its cost-savings, adaptability, maintenance, and agility. This growth exacerbated cloud-specific risks, giving rise to content security solutions.

By Type Analysis

Application Security Segment is Anticipated to Command the Market Due to Rising Number of Software Applications in the Defense Sector

By type, the market is segmented into critical infrastructure security & resilience, application security, cloud security, and others. Application security segment is anticipated to command the market owing to the various software applications for the defense sector. To guard against unauthorized access and alteration, application security is the process of authentication, authorization, encryption, logging, and testing security measures within applications.

Critical infrastructure security & resilience segment is anticipated to grow at the highest CAGR during the forecast period. Several countries, such as Japan, Russia, and the U.S., are building a critical cyber ecosystem to transform the defense sector from traditional defense infrastructure to highly advanced defense cyber security and network security solutions.

By End User Analysis

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Land Force Segment Dominates the Market Owing to the Highest Budget Allocation by Governments

By end user, the market is classified into land force, air force, and naval force. The land force segment dominates the market with maximum budget allocation by several governments in 2022. To give operational superiority to the land force, several governments’ spending along with the help of trusted private players consistently taps into its innovative potential.

Modern smart technologies are enhancing a wide range of activities that take place on military facilities. Smart military bases are the key extension for future fighting force. For instance, Thales Group provides autonomous products and solutions such as encryptors and centralized software for France, Belgium, and Norway to strengthen government grade security.

REGIONAL INSIGHTS

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In terms of region, the market is divided into North America, Asia Pacific, Europe, and the Rest of the World.

North America dominated the defense cyber security market share in 2022 and was valued at USD 6.59 billion in 2022. It is anticipated to be the fastest-growing region during the forecast period. This growth is attributed to major defense industries transforming their cyber security assistance in this region, such as Lockheed Martin, Northrop Grumman Corporation, Raytheon Technologies Corporation, and General Dynamics, and the increasing government contracts to expand its military power.

The market in Asia Pacific held the second-largest share in the base year and is expected to be the second fastest-growing region during the forecast period. This regional market growth is due to increasing investment in cyber security in the defense sector by several countries such as Japan, China, and Australia. For instance, Australian intelligence Agency ASD (Australian Signals Directorate) has long-standing, strong, and significant ties with its Five-Eye counterparts in the U.S., the U.K., Canada, and New Zealand, along with other international partnerships through the international network of CERT. CERT is a forum for resolving cyber security incidents such as Distributed Denial-of-Service (DDOS) attacks and provides alerts & incident handling guidelines.

Europe is expected to be the growing region during the forecast period. This region's market growth is attributed to collaboration and investments in cyber defense to better protect, identify, deter, and defend against growing cyberattacks. Due to the Russia-Ukraine war impact, the European Union countries are trying to boost their cyber security in National Defense. The EU Policy on Cyber Defense seeks to increase EU cyber defense capabilities as well as military and civilian cyber communities' coordination and collaboration. For instance, in 2021, operations office and the cyber activities office in Italy conducted the penetration tests, namely simulations of cyber intrusions designed to assess the resilience level of the Ministry of Defense’s IT systems.

The Rest of the World is anticipated to witness moderate growth during the forecast period. The rest of the world includes Saudi Arabia, Israel, Brazil, and Rest of the Middle East, Africa & Latin America countries. For instance, in January 2023, the UAE-based DTS Solution, which offers defense cyber security advising, consultancy, and engineering services, purchased a majority stake from Beyon Cyber, which bills itself as Bahrain's most sophisticated cyber defense organization.

KEY INDUSTRY PLAYERS

Technological Advancements and Product Developments are the Key Focus Areas of Leading Players 

The global market is relatively fragmented with key players such as Lockheed Martin, the Thales Group, BAE Systems plc, General Dynamics, Northrop Grumman Corporation, and others. Major players focus on technological advancements such as multi factor authentication, encryption techniques, and zero trust along with product innovations such as secured phones, diode solutions, and secured gateways and expansions into emerging markets to increase their market share.

Leading players are now engaging in partnerships with established and emerging IT companies, who have expertise in the cyber security domain to provide secured service or product to the national defense departments. For instance, in October 2022, Thales completed the acquisition of two European cyber security companies, S21sec (in Spain and Portugal) and Excellium (in Belgium and Luxembourg), gathered under the holding company Maxive Cyber security.

LIST OF KEY COMPANIES PROFILED:

• Lockheed Martin (U.S.)


• The Thales Group (France)


• BAE Systems (U.K.)


• General Dynamics (U.S.)


• Northrop Grumman Corporation (U.S.)


• Raytheon Technologies (U.S.)


• Booz Allen Hamilton (U.S.)


• Leonardo (Italy)


• Leidos (U.S.)


• L3Harris Technologies (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• June 2023 - Leonardo presented its emerging technology platforms to ensure critical naval infrastructure’s physical and cyber security. It displayed network solutions that can collect and correlate data from fixed and mobile sensors in the field, for next-generation control rooms.


• April 2023 - Thales declared the introduction of SCRED, a collaborative project by 11 French companies and organizations specifying cyber security. The aim of the project over the next three years is to create a single platform to provide cyber threat intelligence services to companies and government entities.


• April 2023 – HUB Cyber Security Ltd. and Mount Rainier announced complete merger and is planning to operate as “Hub Cyber Security Ltd.”. The merger accounted for a total of USD 1.28 billion. HUB Cybersecurity Ltd. is a provider of confidential computing cyber security solutions and services, established by intelligence personnel of the Israeli Defense Forces.


• April 2023 - Rebellion Defense announced collaboration with the U.S. Department of Energy's National Nuclear Security Administration (NNSA) for cyber security testing. By simulating adversarial attacks, NNSA is planning to deploy Rebellion Defense's Rebellion Nova to strengthen its cyber defense.


• April 2023 – For FY 2024, the U.S. Cyber Command asked for USD 89.4 million for a crucial offensive cyber platform. These are the first budget figures for the system that are made accessible to the general public. The Department of Defense's cyber operators will be able to connect to their targets outside of friendly firewalls thanks to the Joint Common Access Platform (JCAP). Since 2020, the Army has been managing it as Cybercom's executive agent.

REPORT COVERAGE

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The global market research report provides a detailed market analysis. It comprises all major aspects, such as R&D capabilities and optimization of the operating services. Moreover, the report offers insights into market trends, regional analysis, porter’s five forces analysis, competitive landscape, and primarily highlights key industrial developments. Also with the above-mentioned factors, it mainly describes several factors that have contributed to the global market growth in recent years.

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