The Homeland Security (HLS) market has continued its rapid growth in spite of the global economic slowdown, growing a healthy 12 percent. Increasing government spending, growing public awareness, and rise in private sector spending has contributed to the rising demand of HLS products and services. Discretionary spending has also increased and it continues to migrate towards services rather than products where service providers are expected to dominate the HLS landscape in the near future.
Under the Obama administration, the Department of Defense homeland security budget has allocated a majority of the funding towards security, enforcement and investigations mission area, said Kunal Sinha, Asia Pacific Consultant of Aerospace & Defense Practice at Frost & Sullivan. The overall budget has grown by 6.2 percent from the year 2008 to 2009. Customs and border protection has been the top funded agency for the year 2010.
"The perceived and the real threat of terrorism continue 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 from 1990 to 2000," Sinha said.
The 2010 Business outlook for the HLS 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 HLS market is expected to be around US$50 billion in 2010, with the U.S. remaining the largest civil security market in the world," said Sinha.
Frost & Sullivan expects that in 2010, spending for sensors and systems integration will increase in the U.S. In Latin America, the growing crime rate, continuing cross-border incursions and vulnerable foreign oil companies will drive the civil security market. In the U.K., 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 HLS companies.
"However, it is Asia Pacific which offers tremendous opportunity for growth. The Asia Pacific region contributes to almost 21 percent of the global HLS spending. Some of the major macroeconomic influences for growth of HLS in APAC are its fastest growing economy, increased public awareness, history of terrorism, huge growth in tourism, localized instability and technological advancement," Sinha said.
"In the Asia Pacific region, airport security and first-responder services offer the maximum opportunity for growth. China, 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," Sinha said.
In terms of industry specifics, the growing importance of service providers and their expected dominance in the HLS 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," said Sinha.