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The global defense cyber security market size was USD 19.62 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with defense cyber security witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the market exhibited a lower growth of 1.8% in 2020 compared to the average year-on-year growth during 2017-2019. The market is projected to grow from USD 19.96 billion in 2021 to USD 29.81 billion in 2028 at a CAGR of 5.36% during the 2021-2028 period. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
At present, cybersecurity is one of the most critical and national security threats faced by governments across the globe. Countries such as the U.S., China, and India are looking forward to redesigning their defense security norms as a preliminary action against defense cyber security threat management. In January 2020, new guidelines by the U.S. Department of Defense (DoD) were implemented through Cybersecurity Maturity Model Certification (CMMC) for all defense-based contractors. In addition, in the fiscal year 2021 budget, the U.S. DoD spent around USD 5.4 billion on this domain. Thus, the rising awareness regarding cyber threat amongst defense authorities will facilitate the demand for such advanced solutions in near future.
COVID-19 Pandemic Has Negatively Affected Defense Modernization Programs
For the past few years, major defense companies such as Thales Group, Northrop Grumman Corporation, Safran SA, and others have established long term contracts with several countries' governments and governing bodies to install defense cyber security systems. However, due to the COVID-19 pandemic, the uncertainty over the import and export of hardware and services has postponed or cancelled the ongoing contracts between companies and government authorities. Recently, July 2019, Indian military spending on long-term modernization plans was put on hold by the government of India. The modernization of military communication systems and strengthening the cybersecurity domain was put on hold due to the pandemic situation. Similarly Chinese naval programs and the U.S. military programs are impacted by the pandemic.
In addition, it is anticipated that there has been a significant increase in the number of cyberattacks during the pandemic. The change in working rules and regulations for military personnel has increased the number of cyber-attacks in 2020. This is expected to reach over 350 cyberattacks per month. This will largely impact the demand for the cyber security modernization programs for defense.
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Emergence of Internet of Things (IoT) in Defense to Accelerate Both Connectivity and Security Risks
The Internet of Things (IoT) is a technology that connects distinct objects into larger networks. The IoT refers to networked physical assets such as surveillance drones, fighter aircraft, military vehicles, and others. IoT devices gather and transmit required data on situational metrics, such as temperature, usage, location, and status, that assist militants to get the situational awareness on the desired military battlefield operations.
IoT helps the military in numerous applications, such as gather battlefield awareness in advance, proactive monitoring of combat health, real-time vehicle and fleet management, target recognition and autonomous reconnaissance, data processing using artificial intelligence and machine learning, augmented reality (AR) remote training, and others. Smart border wall is one example that comprises IoT devices such as ground sensors and drones that enable border patrol agents to control illegal immigration effectively.
The rising number of connectivity options will lead to a surge in the security risk of defense systems and components, threby propelling the demand for cyber security solutions of defense and services.
Surging Demand for Defense IT Expenditure in Asia Pacific to Boost Defense cyber security Market Growth
According to our research study, Asia Pacific will overtake North America by becoming the highest regional defense spender by 2029. Rising defense expenditure on enhancing the security of military systems and services by governments of major countries such as China, Japan, and India will facilitate the growth of the market across Asia Pacific.
In 2020, the defense budget of China, India, Japan, and South Korea was USD 237 billion, USD 65.8 billion, USD 49 billion, and USD 44 billion, respectively. The Government of India is setting up a cyber agency under the Integrated Defense Staff (IDS) to deal with potent threats in the cyberspace domain. Moreover, governments of Asian countries allocated more than USD 505 billion for the defense sector in 2020 which was 4.3% more than the previous year. The region associated nearly 28% of the global defense spending which was 20% a decade ago.
Governments across Asian countries are focusing on increasing their defense expenditures to strengthen their defense capabilities and curb the cyber threat. It would thus propel the growth of the market.
Transition of Conventional Military Aircraft into Autonomous Aircraft to Propel Growth
The evolution in military warfare techniques has been shifting the focus of military aircraft manufacturers from conventional aircraft to the adoption of autonomous aircraft. Autonomous advanced fighter jets such as Kratos XQ-58 Valkyrie and UTAP-22 Mako jet, an unmanned combat aerial vehicles (UCAVs), significantly improve situational awareness and missile-carrying capacity which assists to execute critical battlefield missions during warfare activities. These autonomous aircraft use AI technology for air-to-air communication to tackle critical battlefield situations.
The adoption of artificial intelligence and internet of things (IoT) in aircraft offers ease in executing missions by assisting pilots in critical decision making during warfare, real-time navigation and surveillance, and optimized route determination. The integration of advanced technology minimizes the risk of mission failures. Moreover, next-generation aircraft are equipped with the integrated advanced avionics equipment, cutting edge technology based electronics, and software systems. The rising IoT and AI applications in military aircraft may lead to the development of reliable and enhanced defense cyber security solutions.
Limited Awareness Related to Cybersecurity Certification Process May Limit Market Growth
Small and medium scale firms face issues with the standardization of the operational process and, thus lack the essential quality certifications. Owing to this, these firms fail to build a partnership with major defense cyber security service providers. This, in turn may hinder the long term contracts and agreements with government authorities and private entities. In addition, several small scale companies undergo financial losses owing to sudden changes in the government regulations as the new ones can transform the functionalities and operational processes of small scale firms.
The limited distribution network and presence of American companies in the Middle Eastern and Asian countries is further responsible for impeding the market growth.
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Hardware Segment to Witness Highest Share Due to Rising Adoption of Cloud Computing Infrastructure
On the basis of platform, the market is classified into hardware, service, and software.
The software segment is projected to grow at the highest CAGR in the foreseeable years. This is attributable to the increasing adoption of on-premise and on-cloud based defense platforms by key companies. In addition, the growing importance of software in digitizing the military operational processes is anticipated to propel the segment’s growth.
The hardware segment contributes to the major market share in 2021. The segment's growth can be attributed to the rising defense Information technology (IT) infrastructure modernization programs by governments of countries such as the United States, China, and India. The rising cyber threats in the military sub-systems is compelling governments of several countries to strengthen their cybersecurity services by collaborating with key service providers. Hence, this will propel the growth of the market during the forecast period.
Cyber Threat Intelligence Segment to Grow Rapidly Propelled by Rising Investments by Governments and Companies in Security Systems
The market is segmented into network security, cyber threat intelligence, IT infrastructure, logistics and operations security, and training services, based on the security type.
The network security solutions segment is expected to grow at a significant rate during the forecast period. The rising implementation of the internet of things (IoT) and artificial intelligence (AI) in the modern battlefield management is propelling the growth of this domain.
The cyber threat intelligence segment is anticipated to grow at the highest CAGR during the forecast period. Companies such as Safran SA, Northrop Grumman Corporation, and Thales Group are the leading services providers of cyber threat intelligence to various countries' governments. Recently, Thales Group established a cyberlab in Belgium dedicated to the advanced research and development facility.
The IT infrastructure segment is likely to hold a considerable share in the global market as high cost is incurred in the procurement as well as installation of advanced components and systems. Moreover, several countries such as China, India, Russia, and the U.S. are incorporating expensive cybersecurity solutions and software in streamlining the traditional defense infrastructure to highly advanced cyber secure systems.
The logistics and operations security segment is anticipated to grow significantly due to the use of cyber security systems in fighter jets, armored vehicles, unmanned aerial vehicles, and ground vehicles. In addition to this, the use of highly secured transportation of goods plays a crucial role during battlefield operations. Countries such as China, India, and Japan are adopting highly advanced AI-based connectivity systems that are prone to cyberattack.
The training services segment is expected to grow significantly during the forecast period. The growth of this segment is attributed to the rising defense expenditure on training and simulation of military personnel for combat operations.
North America Defense Cyber Security Market Size, 2020 (USD Billion)
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The global defense cybersecurity market is segmented based on region into North America, Europe, Asia-Pacific, and the rest of the world.
North America dominated the market in 2020. It stood at USD 7.34 billion in 2020. In October 2020, India and the U.S. signed an agreement to share sensitive military intelligence that would enable the U.S. and Indian militaries to cooperate more closely on the military security domain. Under the agreement, the U.S. will provide access to geospatial data to India. It includes the U.S. maps and satellite data, nautical, topographical, cyber threats, and aeronautical information.
Europe was the second-largest region in the global defense cyber security market share in 2020. The growth can be attributed to the presence of major players such as Atos SE, SAP, and BAE Systems PLC. The U.K. and France are the leading countries in terms of spending on cybersecurity solutions for defense.
Asia Pacific is anticipated to grow at the highest growth rate during the forecast years. The increasing investment in cybersecurity services by several countries that are vulnerable to cyber-attacks such as South Korea, Japan, and Australia is contributing to the growth of this region. In June 2020, the Australian government decided to spend USD 1.35 billion towards enhancing the nation’s cybersecurity capabilities over the next decade, under the Cyber Enhanced Situational Awareness and Response (CESAR) package. Under this package, USD 35 million would be kept for a new cyber threat-sharing platform that can help the government to share intelligence about cyber activity and block emerging threats in the future. Furthermore, USD 62 million will be allocated for the delivery of national situational awareness.
The rest of the world comprises sub-regions such as the Middle East and Africa and Latin America. The market growth in the Middle East and Africa is accredited to the rise in the adoption of cybersecurity systems in the naval and airborne based systems. Latin America's market growth is anticipated by the rise in the spending on advanced cybersecurity based software by the government of countries such as Brazil and Colombia.
Northrop Grumman Corporation is a Dominating Company Offering Defense cyber security-based Solutions
Northrop Grumman Corporation is a leader in providing military and space cybersecurity-based solutions. The firm has a wide range of products and software services related to cybersecurity and weapons with intelligence surveillance. The U.S. Department of Defense (DoD) is the major contractor of the company. It invests in design and development capabilities to support and strengthen the U.S. DoD cybersecurity domain.
An Infographic Representation of Defense Cyber Security Market
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The defense cyber security market report provides a detailed analysis of the market and focuses on key aspects such as key players, platforms, and applications based on air, naval, and ground platforms. Moreover, it offers insights on the parent market, global defense spending market trends, competitive landscape, and key industry developments. In addition to the factors mentioned above, the market report encompasses several direct and indirect factors contributing to the global market's growth over recent years.
Value (USD Billion)
By Platform, Security Type and Geography
By Security Type
Fortune Business Insights says that the global market size was USD 19.62 billion in 2020 and is projected to reach USD 29.81 billion by 2028.
Registering a CAGR of 5.36%, the market will exhibit steady growth in the forecast period (2021-2028).
The cybersecurity segment is expected to lead due to the increasing investment in defense security by countries such as the U.S., China, India, and Russia.
Northrop Grumman Corporation is the leading player in the global market.
North America dominated the market in terms of share in 2020.
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