But because many countries in the region will not allow them to work from their territories, these firms are increasingly turning to what the UN calls "floating armouries", which the report says is a "new and highly profitable business".
They are typically older ships such as tugs, supply and research vessels - used as platforms for storing and transferring weapons and ammunition at sea, outside any country's territorial waters.
They are uncontrolled and "almost entirely unregulated, posing additional legal and security challenges for all parties involved", the report said.
Some 18 vessels operating in international waters have an estimated 7,000 weapons at their disposal to hire out.
It warns that unless a mechanism for international regulation, monitoring and inspection these facilities is established, there is a genuine risk that they will eventually become a threat to regional peace and security, rather than being part of the solution.
There have already been several incidents when the arms have turned up in unexpected places, like in Mozambique where five police officers were found to have 62 weapons and ammunition belonging to one of the private security companies.
Three British citizens were reportedly arrested in Egypt in April with a range of such arms, including laser-guided sniper rifles.
2: Pirates diversify
Pirates have never been more active than in 2011, but the number of successful attacks has dropped dramatically - by 43% compared to 2010 - thanks to the increasing use of private maritime security companies, the report says.
As a result, pirates have adapted and turned to kidnapping for ransom on land, holding aid workers, journalists and tourists hostage.
The Monitoring Group says pirates also market their services as "counter-piracy experts" and "consultants" in ransom negotiations.
One of the pirate groups known to have become involved in both kidnapping and "consulting" is called the Indian Ocean Network.
Investigators said some pirates may also have ties to militants from the al-Shabab Islamist group, Somali officials and private security companies involved in the counter-piracy business.
3: Pirates with passports
How did a pirate leader get his hands on a red diplomatic passport?
A growing number of the piracy fraternity are also members of the diaspora "whose foreign language skills, passports and bank accounts are all valuable assets", the report said.
It also revealed the collusion of senior government officials in shielding a notorious "pirate kingpin" from prosecution by providing him with a diplomatic passport and describing him as a "counter-piracy envoy".
It is alleged that Mohamed Abdi Hassan - known as "Afweyneh", meaning "Big Mouth" in Somali - is "one of the most notorious and influential leaders of the Hobyo-Harardhere Piracy Network".
Somalia's President Sheikh Sharif Sheikh Ahmed admitted to the UN investigators that he had given Afweyneh diplomatic status as "one of several inducements intend[ed] to obtain the dismantling of his pirate network".
