As defense contractors face tighter global budgets and troop withdrawals in the Middle East, many are buying up companies with niche technology services to offset the possibility of declining profits from traditional sources, Reuters reports.

L-3 Communications Holdings has planned a tax-free spinoff of part of its government services segment into a new company that will focus on systems engineering and technical assistance. The new company, called Engility, will have sales of about $2 billion and employee about 10,000 employees.

L-3’s spinoff is only the latest in a series of moves from top contractors this year. Previously, Raytheon bought cybersecurity firm Applied Signal Technology to expand its reach in intelligence gathering. Northrop Grumman Corp spun off its ship operations in March, and ITT Corp has said expects to spin off water and defense divisions by the end of the year.

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