CybersecurityConsolidation expected among large cybersecurrity contractors

Europe’s largest defense company, BAE Systems, says  the number of military contractors selling data protection services to governments will decrease as clients demands for ever-more-sophisticated products  increase.

“While there are 20 companies piling in and competing, that is not the long-term outcome,” David Garfield, managing director for cyber-security at BAE’s Detica unit, told Bloomberg.

Garfield said only four or five providers will likely prevail, and he wants to make sure Detica is in that group. In 2008 BAE bought Detica systems for $800 million in an effort to expand BEA’s cybersecurity offerings, when Northrop Grumman and Lockheed Martin launched their own cybersecurity units.

Now cybersecurity companies have started to look to commercial and foreign clients in addition to their main government clients, and BAE has been forced to find more clients overseas due to a significant drop in the U.K. market.

“We’re getting pulled into almost every sector,” Garfield told Bloomberg. While the defense and financial services industries have led efforts to thwart cyberattacks, other segments are starting to recognize the threat to their business, Garfield added.

Martin Sutherland, Detica’s managing director, knows his company would not be around if they did not make the shift to the U.S. market.

“Certainly the most interesting market for us is the commercial market,” Sutherland told Bloomberg. Cyber-security activities account for about 25 percent of Detica’s sales, with the rest from data-management services and financial compliance.