RESEARCH REPORT
Defense disrupted: New players, new pressures, new possibilities
5-MINUTE READ
June 9, 2025
In brief
- Nearly 90% of defense executives report military needs in North America and Europe, are shifting faster to more software-driven capabilities.
- More than 80% see changes in the way those same regions buy equipment, seeking integrated packages, increased interoperability and in-house sourcing.
- 49% of executives would strengthen partnerships to secure the products and technologies needed to keep pace.
Meeting defense requirements with smarter procurement
As geopolitical tensions mount, defense priorities are shifting fast and militaries around the world are reassessing what they need most to counter modern, high-intensity threats. This change in requirements moves from heavy platforms toward more autonomous, lighter, smarter and more energy-efficient systems.
Customers no longer want stand-alone kits; they demand network-ready systems delivered as complete, service-inclusive solutions. This means platforms must plug effortlessly into allied command networks, arrive with training and lifecycle support and meet tougher energy-efficiency and “human-in-the-loop” oversight rules. Rising sovereignty goals add another filter: suppliers that localize production or transfer technology gain a decisive edge.
Moving from steel to silicon
Defense acquisition is now faced with a triple challenge: disruptive products and technologies, innovation from new entrants and alternative suppliers from emerging nations—all redefining established market dynamics.
Combat power is tilting from tonnage to technology with AI, autonomous systems and space tech rewriting the rules of the battlefield. Digital-native startups and fast-rising firms from countries like South Korea and Turkey are leapfrogging legacy primes with agile, software-centric solutions delivered on time and on budget. Incumbents that can’t pivot from legacy solutions to mastery of code risk being outpaced on the new front lines. Nations including Spain or Australia are already redirecting budgets from heavy armor to silicon-based capabilities—investing in new satellites, 5G, autonomous systems and even quantum solutions—to stay ahead in a data-driven battlespace.
DATA
54%
of defense executives point AI as key disrupting technology
The deployment of AI in the defense sector is already a reality and is now taking on more of an operational than prospective characteristic for the industry.
Patrice Caine / CEO, Thales Group
The adaptation gap
As the defense industry transforms, both traditional contractors and newer entrants find themselves struggling to adapt. Established suppliers command scale and supply-chain depth but struggle with digital talent, bureaucratic speed and dependence on aging product lines. New entrants excel at rapid prototyping and AI-native design yet hit walls when scaling funding, navigating regulation and building robust production pipelines. In essence, incumbents and startups each have half the equation.
Partnerships: A lifeline in a fragmenting world
All companies need to partner in new alliances that mitigate weaknesses and pool strengths. Effectively leveraging each other's strengths, like incumbents’ established market presence and newcomers’ innovative agility, can position the entire industry to better respond to shifting dynamics.
Our research points to two actions that both established suppliers and new market entrants agree are critical to successful partnerships: identifying and responding to unmet defense needs driven by cutting-edge innovation and rapidly scaling production to meet emerging requirements.
Beyond these shared imperatives, incumbents must further invest in new technologies and modular innovation, while startups can gain traction by emphasizing interoperability, open architectures and tailored software solutions.
DATA
49%
of industry executives identified partnership building as essential for accessing necessary products and technologies
No one company—or even one industry—can meet today’s global defense and security needs alone.
James Taiclet / CEO, Lockheed Martin
About the International Defense Insight Report
Launched in 2024, the Accenture International Defense Insight Report is an answer to the growing need for data-driven insight on changing dynamics in the global defense environment. For this second annual report, Accenture combined analysis of primary and secondary research on ongoing disruption in the defense market and industry responses to changing market dynamics. We conducted primary research through a survey of 80 industry executives from both established suppliers and emerging market entrants from 19 countries in North America, Europe and growth markets, alongside interviews with current and former defense executives. We supplemented both methods with financial analysis of major defense companies, as well as analysis of the secondary sources including third party reports, data sets and trade media articles.
We conducted interviews and the executive survey which were completed in March 2025; views are subject to considerable change as geopolitical conditions can rapidly evolve.
