BAE cashes in on state ‘cyber war’
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Tuesday 01 October 2013
BAE, one of the biggest defence companies in the world, is expected to be a major beneficiary of the Government’s push into cyber attacks, having already made sales of nearly £1bn in its IT security business over the past five years.
Defence Secretary Philip Hammond shocked the defence community this week by publicly declaring before the Conservative Party conference that the UK was “developing a full-spectrum military cyber capability including a strike capability”.
Companies House filings show that BAE’s Detica cyber security and intelligence arm has been raking in rapidly growing revenues in recent years as it seeks to add to its traditional weapons sales. From £180m-£190m in 2008 and 2009, Detica’s sales grew to £211m last year. It is thought half of those revenues came from Government cyber security contracts, despite a warning in the last set of accounts that the Government had been restricting spending as part of its deficit reduction plan.
Profits have fluctuated from break-even to £20m in the years since BAE bought Detica in 2008, due to various one-off factors, but in total since 2008 they come to about £50m. Britain has been rapidly building up a large industry in the cyber security world, including some controversial businesses such as Gamma, the Hampshire-based business that sells equipment to foreign regimes designed to allow governments to snoop on their citizens’ emails.
While about 50 per cent of Detica’s takings are from classified Government contracts, it is also making tens of millions of pounds a year from advising on, and installing, cyber security measures for the private sector. Only this month it launched IndustrialProtect, which it described as a “military grade” system to protect industrial infrastructure from cyber attack. The Government regularly cites Detica statistics which claim cyber crime costs the economy £27bn a year, but many experts believe this overstates the problem.
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