Defense Contracting Service Market to Reach $862.66 Billion by 2029, Expanding at 5.2% CAGR

 Aimed at strategic decision-makers, this report explores current opportunities, emerging trends, and market dynamics shaping the defense contracting service sector.

What Is The Expected CAGR For The Defense Contracting Service Market Through 2025?
The defense contracting service market size has grown strongly in recent years. It will grow from $669.17 billion in 2024 to $705.44 billion in 2025 at a compound annual growth rate (CAGR) of 5.4%. The growth in the historic period can be attributed to increasing geopolitical tensions, increasing terrorist threats, growth in international defense exports, growth in defense training, and a rise in the adoption of autonomous combat vehicles.

The defense contracting service market size is expected to see strong growth in the next few years. It will grow to $862.66 billion in 2029 at a compound annual growth rate (CAGR) of 5.2%. The growth in the forecast period can be attributed to growing threats in digital warfare, growing demand for unmanned systems, increasing defense spending, rising demand for secure defense infrastructures, and increasing focus on defense modernization programs. Major trends in the forecast period include technological advancements, artificial intelligence, machine learning, big data analytics, and advancements in aerospace technology.

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Which Key Factors Will Influence Defense Contracting Service Market Growth Over 2025-2034?
The increasing geopolitical tensions are expected to propel the growth of the defense contracting service market going forward. Geopolitical tensions refer to escalating disagreements or competition between countries due to political, military, or strategic factors. The increasing geopolitical tensions are primarily due to territorial disputes, as nations assert sovereignty over contested regions, leading to heightened military presence, diplomatic confrontations, and regional instability. Defense contracting services help address geopolitical tensions by enabling governments to rapidly procure advanced military technologies and strategic capabilities that strengthen national security and deterrence, support allied operations, and maintain a competitive edge in regions affected by conflict or instability. For instance, in December 2023, according to the report published by the Institute for Economics and Peace, an Australia-based think tank, terrorist attacks were more lethal in 2022, with an average of 1.7 deaths per attack, up from 1.3 deaths per attack in 2021. Therefore, the increasing geopolitical tensions are driving the growth of the defense contracting service market.

Comprehensive Segment-Wise Insights Into The Defense Contracting Service Market
The defense contracting service market covered in this report is segmented –

1) By Service Type: Engineering And Technical Services, Logistics And Sustainment, Training And Simulation, Cybersecurity, Program Management, Professional Services
2) By Contract Type: Fixed-Price Contracts, Cost-Reimbursement Contracts, Time And Material Contracts, Indefinite Delivery Or Indefinite Quantity Contracts
3) By Application Area: Aerospace, Land Systems, Maritime Systems, Information Technology, Cybersecurity, Intelligence, Homeland Security
4) By End-User: Government Agencies, Military Branches, Defense Contractors, Industry Partners

Subsegments:
1) By Engineering And Technical Services: Systems Engineering, Test and Evaluation, Design and Development, Integration Services, Prototyping
2) By Logistics And Sustainment: Supply Chain Management, Maintenance, Repair, and Overhaul (MRO), Depot Services, Spare Parts Management, Lifecycle Support
3) By Training And Simulation: Live Training, Virtual Training, Constructive Simulation, Computer-Based Training, Mission Rehearsal Systems
4) By Cybersecurity: Network Security, Endpoint Security, Threat Intelligence, Security Operations Centers (SOC), Risk and Compliance Management
5) By Program Management: Project Planning and Scheduling, Cost Estimation and Control, Risk Management, Contract Administration, Performance Monitoring
6) By Professional Services: Consulting Services, Financial and Auditing Services, Legal and Compliance Services, Human Capital Services, Strategic Advisory

What Are The Key Trends Shaping The Defense Contracting Service Industry?
Major companies operating in the defense contracting service market are focusing on developing innovative solutions, such as advanced tactical directed energy solutions, to provide cost-effective alternatives to traditional munitions. Tactical directed energy solutions are advanced weapons that use concentrated energy, such as lasers or microwaves, to precisely target and neutralize threats with reduced collateral damage. For instance, in March 2025, Parsons Corporation, a US-based technology company, signed a cooperative research and development agreement (CRADA) with the U.S. Air Force Civil Engineer Center, Readiness Directorate (AFCEC/CX), and unveiled its next-generation Zeus 4 directed energy system integrated onto the Joint Light Tactical Vehicle (JLTV), featuring AI-powered targeting sensors and a palletized, bolt-on configuration to enhance operational flexibility, reduce costs, and enable precise neutralization of unexploded ordnance with minimal collateral damage. This advancement builds on the success of the previous Zeus 3 system and reflects a growing shift in defense contracting toward mobile, scalable, and vehicle-agnostic directed energy capabilities that can be rapidly deployed across diverse combat scenarios.

Analysis Of Key Players In Defense Contracting Service Market
Major Companies operating in the defense contracting service market are Science Applications International Corporation Inc., RTX Corporation, The Boeing Company, Lockheed Martin Corporation, Airbus SE, General Dynamics Corporation, Northrop Grumman Corporation, Honeywell International Inc., BAE Systems plc, L3Harris Technologies Inc., Leonardo S.p.A., Leidos Holdings Inc., Textron Inc., Amentum Government Services Holdings LLC, Huntington Ingalls Industries Inc., Booz Allen Hamilton Holding Corporation, Saab AB, CAE Inc., BWX Technologies Inc., AeroVironment Inc.

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Defense Contracting Service Market Size And Share 2034

What Are The Key Regional Trends In The Defense Contracting Service Market?
North America was the largest region in the defense contracting service market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the defense contracting service market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.

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