AnalysisRobust homeland security market in 2010

Published 8 February 2010

The homeland security market has grown by 12 percent in the last year, and the trend will continue in 2010; homeland security budgets in the government and public sectors around the world continue to grow despite economic downturn, budget cuts, and belt tightening; in the United States, the proposed 2011 DHS budget will see an increase of nearly 3 percent, and the homeland security portion of the Department of Defense’s budget will see an increase as well; the 2010 business outlook for homeland security products and services remains strong, buoyed by the increased security threats; organization of mass events like the Olympics and commonwealth games; infrastructure modernization programs in different countries; protection of critical infrastructure; and Border protection

The homeland security market has continued its rapid growth in spite of the global economic slowdown, growing by a healthy 12 percent. Increased government spending, growing public awareness, and rise in private sector spending has contributed to the rising demand of homeland security products and services. Discretionary spending has also increased and it continues to migrate toward services rather than products where service providers are expected to dominate the homeland security landscape in the near future.

According to Frost & Sullivan’s Asia Pacific consultant of aerospace and defense practice Kunal Sinha, under the Obama administration, the Department of Defense (DoD) homeland security budget has allocated a majority of the funding toward security, enforcement, and investigations mission area. The overall budget has grown by 6.2 percent from the year 2008-9. Customs and Border Protection (CBP) has been the top funded agency for the year 2010.

The perceived and the real threat of terrorism continues to be the key driver of the homeland security market. Global terrorist activities have been growing dramatically since 2000, after a relative lull between the years 1990-2000,” he continues.

The 2010 business outlook for homeland security products and services remains strong, buoyed by the increased security threats; organization of mass events like the Olympics and commonwealth games; infrastructure modernization programs in different countries; protection of critical infrastructure; and Border protection.

The Global [homeland security] market is expected to be around $50 billion in 2010, with the United States remaining the largest civil security market in the world,” says Sinha.

Frost & Sullivan expects that in 2010, spending for sensors and systems integration will increase in the United States. In Latin America, the growing crime rate, continuing cross-border incursions, and vulnerable foreign oil companies will drive the civil security market. In the United Kingdom, the upcoming Olympic Games and vulnerable mass transport will keep the civil security market buoyant. In the Middle East region, growing terrorist activities and the protection of critical infrastructure like the petroleum complexes will ensure sufficient business for the homeland security companies.

However, it is Asia Pacific which offers tremendous opportunity for growth. The Asia Pacific region contributes to almost 21 percent of the global [homeland security] spending. Some of the major macroeconomic influences for growth of [homeland security] in APAC are its fastest growing economy, increased public awareness, history of terrorism, huge growth in tourism, localized instability and technological advancement,” Sinha states.

He continues, “In the Asia Pacific region, airport security and first-responder services offer the maximum opportunity for growth. , Japan and India are expected to lead the homeland security market in the APAC region although Vietnam, Malaysia and Indonesia have also grown their share over the years and are emerging as potential HLS markets.”

In terms of industry specifics, the growing importance of service providers and their expected dominance in the [homeland security] market in 2010 is the defining trend that has emerged.

Services in the Department of Homeland Security (DHS) include everything from IT integration, engineering consulting, and management support to construction, guard services, and facility management. These are the areas where DHS spends the most money and where companies, old or new, can still find room to grow,” says Sinha.