U.S. federal IT stalwart Leidos fortifies its foothold in Australia

Leidos expands in Australia with a defense IT modernization award and the launch of a new software development facility

Leidos will join APAC-based partner Fujitsu and U.S.-based partner KBRWyle on a three-year, AU$175 million program to upgrade and modernize IT and communications systems for the Australian Department of Defence (DOD). The enhancement will include service desk support for end users as well as workstations, VoIP and email upgrades, the implementation of new collaboration tools, and network infrastructure services and management.

Leidos has a 20-plus-year history serving clients in Australia, including the national government and provincial authorities, the nation’s healthcare sector, the intelligence community, and the country’s border defense agencies. In 2020 between 45% and 50% of Leidos’s $1 billion in overseas sales revenue derived from Australia. Leidos’ 2020 increase in international revenue, up 17.5% year-to-year, was driven largely by aggressive growth in Australia, and the company is primed for continued rapid expansion in the country and across APAC more broadly as Leidos leverages Australia as a staging point and case study for future regional expansion. The recent award with the Australian DOD comes on the heels of an AU$21 million contract with the agency for IT systems consolidation in 2020.

Leidos is also opening a new software development factory in Melbourne that will create 100 or more IT jobs and will be the company’s first such facility outside the U.S. — another sign the company expects steady growth in Australia for many years. In 2020 Australia Prime Minister Scott Morrison affirmed over AU$270 billion (about $190 billion) in new defense outlays over the next decade, including defense IT modernization and upgrades to weapons platforms. Australia’s relations with China have become increasingly strained in recent months, and government officials have also noted a sharp increase in regional economic and strategic instability. Leidos is ideally positioned to capture a large share of the expected budgetary investments to modernize defense platforms and civilian IT infrastructures.

Leidos’ Australian operations make the company relatively unique among top-tier federally centric IT integrators and professional services vendors, at least regarding the scale and tenure of its business in the ANZ region. Maximus provides business process management solutions, mostly employment services for the Australian government’s Disability Employment Services program, but the company has no presence in the Australian defense sector. Conversely, Raytheon Intelligence & Space (I&S) derives nearly 40% of its $19 billion backlog from international markets and 12% of its total revenue (about $800 million in 2020) from APAC (not exclusive to Australia), but does not provide traditional enterprise IT services to the Australian government or other foreign government clients in the region.

Leidos is among the 13 vendors covered in TBR’s quarterly Public Sector IT Services Benchmark and one of eight IT services companies primarily serving the U.S. federal government TBR analyzes in depth in semiannual reports featuring financial performance, go-to-market approaches, and alliance and resource management strategies. TBR’s Public Sector portfolio focuses primarily on IT services vendors’ work with U.S. federal government agencies. The international public sector market continues to attract investment from TBR’s covered vendors and remains an important, if small, revenue stream.