Homeland security functions to avert any terrorist attacks on the homeland and to provide resilience in case of an attack. It also has to provide credible security against cyber fraud and cyber espionage and provide detection and protection capabilities against CBRN threats. The threat of cross border terrorism, cybercrime, piracy, drug trade, human trafficking, internal dissent, separatist movements has been the driving factor for the homeland security market.

The risk of terrorist attack has led to an increase in aviation security spending. The illegal arms and drug trafficking and immigration has led to heightened border and seaport security and has increased the demand for explosive detection systems, body scanners and baggage screening systems. The threat of a cyber attack disrupting public and private network and infrastructure has driven the cyber security spending across the past decade. The need for effective identification and security checking and the need to provide access control to critical infrastructure have led to the adaptation biometric and other identification technologies.

The general IT modernization has greatly improved record keeping and coordination of cases across the internal security department and thus has gained wide acceptance across the world and is seen as yet another driver in the homeland security sector. Similarly the need for effective command, control and intelligence apparatus for the first responders has led the need for effective C3I systems. The upgrading of border security and the demand for effective immigration control has fueled the need for biometrics, fixed surveillance devices, and unmanned aerial vehicles.

US and Europe are expected to remain as the main market for homeland security systems and the region has the top industry participants who cater to this sector. The second biggest growth opportunity is from the Asia Pacific region where the growing economies are set to increase their homeland security expenditure. Opportunity also exists in Middle East, followed by Latin America and Africa.

Global homeland security market is estimated to be US$415.53 billion in 2013 and is expected to register a CARC of 5.54% to reach US$544.02 billion by 2018. The cumulative market for homeland security during the forecast period is estimated at US$2842.47 billion. However, about 15% of that total is expected to be the capital expenditure.

In 2013 aviation security sector is expected to be US$415.53 billion with a market share of 6.18 percent of the total homeland security market. Border security market has a market share of 19.51%, CBRN security holds 19.11%, Counter-Terror Intelligence holds a market share of 4.77%, and First responders occupy a share of 36.51% while IT, while maritime security and cyber security takes a share of 10.72%, 12.30 and 1.77% respectively.

Although western nations are affected by the financial crisis and the ongoing defence budget cuts, homeland security spending is to be spared from deep cuts. Furthermore, sectors such as cyber security, C3I, IT Services and border security are likely to experience an increase in spending across all regions alike. The growing economies in the Asia Pacific and Brazil with the upcoming Olympics during the forecast period are expected to increase spending on homeland security. Similarly, the Middle East and North Africa with the recent Arab spring and the ongoing instability across the region especially around Syria is anticipated to drive spending of the surrounding nations, especially Turkey.

Chinas internal security budget which stands at US$ 111 billion has for the first time crossed its defence budget. However, China represents negligible opportunity as foreign defence and security firms are still restricted from doing business with it.

US is by far the largest homeland security spender and spent around US$14.2 million in 2011 as capital which was about 25% of the total homeland security spending. The UK which had been increasing its spending for the past couple of years in preparation for the London Olympics had slightly reduced its estimated spending until 2015. The top 25 firms in the homeland security sector are all from US and Europe. Apart from their home market, these firms have won extensive contract across the globe.

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