By Type

The hardware segment emerged as the dominant category in 2019, largely due to substantial investments in defense infrastructure, including data centers and secure communication platforms. One of the most significant contributions to this growth was the USD 10 billion JEDI cloud contract awarded to Microsoft, which underscored the strategic focus on hardware modernization in defense. Meanwhile, the software segment is projected to grow at the fastest rate, registering a CAGR of 4.71% during the forecast period. This growth is fueled by the increasing integration of advanced technologies such as artificial intelligence (AI) and the Internet of Things (IoT) into military operations. The adoption of enterprise resource planning (ERP) systems and defense-specific management software is also playing a key role in the expansion of this segment. In addition, the services segment is gaining traction globally, as defense departments prioritize IT consulting, systems integration, and managed services to enhance digital defense capabilities and operational readiness.

By Application

In terms of application, IT infrastructure remains the largest segment, driven by the high capital investments required to build secure, scalable, and mission-critical networks across defense organizations. These infrastructures serve as the backbone of military communication and data exchange systems. The cybersecurity segment, however, is experiencing the fastest growth. With rising concerns over cyber threats, countries like the United States have significantly increased their defense cybersecurity budgets—allocating USD 5.4 billion in 2021 alone. Initiatives such as the Cybersecurity Maturity Model Certification (CMMC) are further strengthening the importance of robust cybersecurity frameworks within defense IT ecosystems. Other emerging applications, including defense cloud computing, logistics and asset management, and real-time analytics, are also witnessing growing adoption. These technologies are increasingly integrated into modern defense platforms to enable efficient operations and strategic decision-making.