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The defense information technology (IT) spending market size is estimated to grow at a CAGR of 4.49% between 2023 and 2028. The market size is forecast to increase by USD 23.53 billion. The growth of the market depends on several factors, including the development of autonomous systems, the increasing military budgets, and the need for secure and resilient communication networks. The global defense IT spending market refers to the expenditures made by various defense agencies and organizations worldwide on information technology (IT) products, services, and solutions. This includes investments made in hardware, software, networking, communications, cybersecurity, data analytics, artificial intelligence (AI), cloud computing, and other IT-related domains within the defense sector. Defense IT spending is aimed at enhancing the capabilities and effectiveness of defense forces by leveraging technology advancements. It encompasses both operational and administrative IT requirements, ranging from command and control systems, surveillance and reconnaissance solutions, and secure communication networks to personnel management, finance, logistics, and training systems.
This defense IT spending market report extensively covers market segmentation by type (service, software, and hardware), application (cyber security, IT infrastructure, logistic and asset management, and others), and geography (North America, APAC, Europe, Middle East and Africa, and South America). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2018 - 2022.
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One of the key factors driving the defense information technology (IT) spending market growth is the development of autonomous systems. Autonomous systems can be referred to as advanced technologically driven systems that can carry out a variety of functions without human assistance. In addition, these systems include autonomous weaponry, unmanned ground vehicles (UGVs), unmanned aerial vehicles (UAVs), and surveillance systems.
Moreover, the use of autonomous systems in various military operations has been acknowledged by the defense industry as having potential benefits. In addition, these systems can improve operational efficiency, lower the risk to human life, increase situational awareness, and give more accuracy and precision in military operations. Therefore, defense organizations worldwide are increasingly allocating a significant portion of their IT budgets toward the development and adoption of autonomous systems. Hence, such factors are positively impacting the defense IT spending market. Therefore, it is expected to drive the market growth during the forecast period.
A key factor shaping the defense information technology (IT) spending market growth is the adoption of artificial intelligence (AI) and machine learning (ML). One of the primary trends in the global defense IT spending market is the adoption of artificial intelligence (AI) and machine learning (ML). In addition, governments and defense organizations worldwide are recognizing the potential of these technologies to enhance military capabilities, improve decision-making processes, and strengthen national security.
Moreover, some of the main factors fuelling the adoption of AI and ML in the defense IT spending market include enabling autonomous systems, advanced data analysis, cybersecurity and threat intelligence, predictive maintenance, war gaming and simulation, and improved situational awareness. In addition, defense businesses can see cost savings and greater operational efficiency by implementing AI and ML technologies to automate mundane administrative activities, streamline logistics, and minimize manual involvement. Hence, such factors are driving the market growth during the forecast period.
Issues related to digital sovereignty are one of the key challenges hindering defense information technology (IT) spending market growth. The growing use of digital technology such as augmented reality, in defense systems emphasizes data privacy and safeguarding sensitive information from cyber threats. In addition, since digital sovereignty necessitates the ability to handle and keep vital defense data inside national borders, it presents challenges for international defense IT spending because cross-border data transfers are frequently involved.
Moreover, to maintain digital sovereignty, developing domestic defense IT capabilities becomes essential, but it can take a long period and significant financial resources. Furthermore, digital sovereignty in the global defense IT spending market poses several challenges related to data privacy, vendor dependency, interoperability, knowledge gaps, international regulations, and economic implications. Hence, such factors are negatively impacting the defense information technology spending market. Therefore, it is expected to hinder the market growth during the forecast period.
The service segment is estimated to witness significant growth during the forecast period. The global defense IT spending market comprises various service segments that cater to the specific needs and requirements of defense organizations worldwide. Some of the main service segments in this market are consulting services, systems integration, application development and maintenance, managed services, cybersecurity services, training and support services, and data analytics services.
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The service segment was the largest segment and was valued at USD 32.61 billion in 2018. Moreover, Consulting service is one of the essential service segments in military firms for comprehending requirements and developing strategies. In addition, these services include giving counsel, direction, and suggestions on a range of topics, including digital transformation, cybersecurity, data analytics, and technology adoption. Furthermore, system integration service is another service segment that integrates different defense IT systems, tools, and software. In addition, these services assist defense companies with new technology integration, system performance optimization, and consolidation of their current IT infrastructure. Hence, such factors are fuelling the growth of this segment which in turn will drive the market growth during the forecast period.
The need to protect critical defense infrastructure will fuel the cybersecurity segment which will increase the market growth. The cyber security segment deals with the financial resources that are set aside to defend vital defense infrastructure against cyberattacks within the global defense IT spending market. In addition, defense organizations throughout the world are becoming more and more susceptible to cyberattacks that threaten critical data and national security as technology develops. Moreover, the defense industry has placed a greater emphasis on cybersecurity in recent years as governments have realized how crucial it is to safeguard their defense IT networks and systems. Furthermore, defense companies are investing in a range of cybersecurity technologies and solutions to protect their operations and data against cyberattacks. Hence, such factors are fuelling the growth of this segment which in turn drives the market growth during the forecast period.
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North America is estimated to contribute 46% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The expenditure made by defense organizations and agencies in North America on information technology (IT) products and services refers to the defense IT spending market in North America. The growth of the defense information technology spending market in the region is due to the presence of major defense organizations such as the United States Department of Defense (DoD). Defense IT investment is mostly fuelled by the growing requirement for cutting-edge solutions to handle rising security threats. Furthermore, the regional market is expanding due to the increasing use of cloud computing, big data analytics, artificial intelligence, and cybersecurity solutions. Hence, such factors are driving the market growth in North America during the forecast period.
In 2020, during the COVID-19 pandemic, the growth of the global defense IT spending market witnessed a significant slowdown due to the disruption of the supply chain for necessary components and raw materials required in the manufacture of defense IT systems in North America. However, in 2021, the initiation of large-scale vaccination drives lifted the lockdown and travel restrictions, which led to the restoration of operations in supply chain activities. Such factors are expected to drive the market during the forecast period.
The defense IT spending market report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Defense IT Spending Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Accenture Plc: The company offers defense IT spending services that enhance analytics capabilities and enable greater use of digital applications by military personnel.
Amazon.com Inc: The company offers defense IT spending services that provide global infrastructure and security by enabling defense and national security missions with cloud computing.
BAE Systems Plc: The company offers defense IT spending services that provide digital intelligence technology that delivers secure information at pace through smarter use of data that transforms disparate sources into relevant and timely intelligence for customers.
The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The defense IT spending market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 - 2022.
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Defense IT Spending Market Scope |
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Report Coverage |
Details |
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Page number |
176 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 4.49% |
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Market Growth 2024-2028 |
USD 23.53 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
4.31 |
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Regional analysis |
North America, APAC, Europe, Middle East and Africa, and South America |
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Performing market contribution |
North America at 46% |
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Key countries |
US, China, India, the UK, and Germany |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Accenture Plc, Amazon.com Inc., BAE Systems Plc, CRON AI, Cubic Corp., CyAmast Pty Ltd., Dell Technologies Inc., General Dynamics Corp., Hewlett Packard Enterprise Co., Holo Light GmbH, International Business Machines Corp., Kratos Defense and Security Solutions Inc., Leidos Holdings Inc., ManTech International Corp., Microsoft Corp., Northrop Grumman Corp., Oracle Corp., Pennant International Group PLC, Science Applications International Corp. Inc., and Palantir Technologies Inc. |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Application
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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