It’s been a big year for Kinexus. We launched our 11th edition of Defence Industry Insights, secured several tender wins and had strong engagement across the sector, including hosting a workforce panel at the Avalon Airshow focused on autonomous systems, and delivering workforce and salary trend briefings at MilCIS and IndoPac.
As the year draws to a close, we spoke with Kinexus Director Raj Kutty and Regional Manager Simon Blake to reflect on defence industry workforce trends in 2025, and what employers, SMEs, and candidates should expect as they plan for 2026.
Hiring in 2025; A Reset, Not a Retreat
Australia-wide
Kinexus tracks employment trends across engineering, ICT, project management, and security-cleared roles. We also utilise publicly available data such as the Internet Vacancy Index (IVI) data from the Department of Jobs and Skills.
Year-on-year, professional job vacancies are down 7%. In certain locations the trend is stronger; in ACT, jobs are down 25%, a reflection on government hiring policy.
Importantly, IVI data is still 20% above pre-COVID levels, so despite the downtrend the market is continuing its gradual correction, rather than entering recessionary territory.
Defence industry
For Defence, the long-term focus is on achieving the right balance between APS, ADF, MSP, and industry-delivered capability.
Contractor numbers have steadily decreased within CASG and DDG over the past three years, largely driven by APS workforce expansion and a reduction in outsourced contractor spend. Reductions have been felt most acutely in non-technical roles, for example PMO, and at NV1 level, while technical ICT, engineering and NV2/TSPV roles remain essential and more resilient.
Defence messaging has been clear; the budget is set and there is no slush fund. This, combined with biennial review of NDS and IIP, means less new projects, conservative workforce planning, and no hiring at risk; resulting in a general air of caution.
Defence Project Changes
While hiring volumes softened, Defence’s long-term strategi agenda continued to advance.
Key 2025 developments included:
SEA3000 (Mogami-class frigates) progressing to announcement stage, with workforce impacts expected from late 2026.
AUKUS Pillar 1 passing visible milestones, notably the USS Virginia docking and completing a maintenance period at HMAS Stirling for the first time. Outside of this, AUKUS Pillar 1 progress has not resulted in market activity, owing to internal redeployment of resources. This is likely to change in late 2026 or early 2027.
AUKUS Pillar 2 accelerating fastest in autonomous systems, with big-budget programs under SEA1200, Ghost Shark, and emerging primes driving new technology-led demand.
Land 400 Phase 3 and Integrated Workforce Program (IWP) recompetes creating movement, disruption, and short-term workforce uncertainty.
A centralisation agenda within Defence Digital Group (DDG) will reshape technical demand away from legacy platforms toward cloud, cyber, data, and secure infrastructure.
While global geopolitics added noise to the system, Defence’s strategic direction, particularly across AUKUS and maritime capability, remains intact.
What This Meant for Defence Industry SMEs
Inconsistent workflow from Defence and primes led to demand volatility, making workforce planning more complex. Many SMEs relied on trusted recruitment partners to access specialist skills, particularly where primes leaned more heavily on internal talent acquisition models.
At the same time:
New projects and emerging technologies continued to create opportunity
Intelligence agencies and highly-classified programs remained relatively active
Many SMEs began exploring diversification towards either non-Defence federal clients, joint ventures, or new capability niches.
Encouragingly, 60–70% of SMEs surveyed in late 2025 expect growth in 2026.
Candidate Sentiment: More Watching, Less Moving
Candidate behaviour across defence industry roles has shifted noticeably across 2025.
More professionals are monitoring the market, but fewer are willing to move unless roles offer a compelling value proposition. This has been particularly evident among experienced, security-cleared candidates.
Uncertainty has dampened mobility, particularly among experienced, security-cleared workers. PMO and non-technical roles have been most affected, while deep technical, engineering, NV2 and TSPV-cleared skills remain scarce.
Importantly, 70% of government agencies still report insufficient technical capability, reinforcing that demand is there – even if it’s not at previous volumes.
Advice to Employers: Protect Capability, Build Leaders
The consistent advice from industry leaders in 2025 was simple but clear: now is not the time to lose your best people.
Given that half the workforce are looking for work, now is the time to consider what you are doing to keep your best people
With limited likelihood of short-term stimulus, we encourage employers to:
Invest in existing skills and workforce capability
Strengthen leadership and succession pipelines
Prioritise retention of critical Defence and security-cleared capability
The key to keeping and attracting people is providing access to interesting work and flexible conditions. Defence industry SMEs are competing with primes well in this space, by focusing on the quality of the work rather than matching salary.
As competition for future-critical skills intensifies, employers that invest early will be best placed when demand accelerates again.
Looking Ahead to 2026
The outlook for 2026 is broadly stable, albeit subdued.
Several structural developments will shape workforce planning:
Biennial updates to the National Defence Strategy (NDS) and Integrated Investment Program (IIP) from Q2 2026, aligning major bids and awards but extending decision cycles
A revised Managed Services Provider (MSP) model expected in early 2026
Defence Capability Support Panel (DCSP), currently at tender, with a planned go-live in July 2026
Continued infrastructure investment supporting AUKUS and continuous naval shipbuilding
From a skills perspective, traditional Defence capability areas, mechanical, electrical, ILS, asset management, while still essential are complemented by demand for expertise in nuclear, infrastructure, cyber security and autonomous systems.
The key challenge for the Australian Defence industry will be identifying where these skills already exist and building effective pathways to bring them in, including through veteran transition and cross-sector mobility.
We predict continued demand within the national intelligence sector for highly cleared contractors and permanent staff. We also predict growth in Adelaide for Defence related skills to the tune of roughly 10,000 roles within the next 10 years. This is off the back of 15% growth in Adelaide in 23/24, the strongest growth of any state.
After a period of decline in the last 2-3 years, the market seems to be stabilising. Demand has changed rather than disappeared. Kinexus believe that the majority of that change has already occurred, and we can see stabilisation and modest growth in certain areas.
For organisations that plan deliberately, invest in people, and use workforce data to get a balanced view of the market, there is the opportunity to make the most of these changing conditions.
We wish all our candidates, clients and associates a merry Christmas and happy new year!
Photo by Kelly Sikkema on Unsplash
