Booz Allen Hamilton, one of the U.S. government’s top consulting contractors, has announced it will cut approximately 2,500 jobs after forecasting weaker-than-expected profits, a move that sent its shares tumbling 18% in early trading on Friday. The cuts come as the firm reels from aggressive federal cost-cutting initiatives implemented under President Donald Trump.
The company, which derives 98% of its $12 billion annual revenue from government contracts, is among ten firms targeted by the Trump administration’s “consultant spend review” — a sweeping austerity measure designed to save taxpayers billions by cancelling or renegotiating federal consulting and IT contracts. The initiative, spearheaded by the newly created Department of Government Efficiency (Doge), led by entrepreneur Elon Musk, claims to have saved $3 billion so far from 362 contract modifications and cancellations.
Booz Allen CEO Horacio Rozanski acknowledged that the transition of presidential administrations typically creates “some degree of near-term disruption,” but admitted that the scale and pace of these changes had exceeded expectations.
“As a result of reduced non-defence spending and fewer new opportunities, we are being forced to realign our workforce,” Rozanski said during an earnings call with analysts. “The dynamism of our business typically allows us to move our highly skilled talent quickly to new opportunities, but at a time when procurements are moving much slower than normal, this has been challenging.”
The company said that its non-defence federal work is expected to contract by double digits, and that it would reduce its 36,000-strong workforce by about 7% over the next three months.
Chief Financial Officer Matt Calderone outlined that revenue growth for the fiscal year beginning April 1 would likely not exceed 4%, while adjusted EBITDA was forecast between $1.32 billion and $1.37 billion — roughly 5% below Bloomberg consensus estimates.
Since Trump’s election in November, Booz Allen’s share price has fallen about 43%, underscoring investor anxiety about the long-term viability of consulting work under the administration’s aggressive belt-tightening.
In an attempt to demonstrate flexibility and retain some favor with the federal government, Booz Allen recently offered to voluntarily modify or relinquish contracts that could yield over $1 billion in savings. Rozanski framed this gesture as a way to “help procurement agencies get to know us better,” and suggested the company remained optimistic about future opportunities once the review concludes.
However, Financial Times analysis of federal contracting data reveals a significant uptick in cancellations across the ten targeted firms since Trump’s inauguration in January — a trend that raises concerns about sustained disruption across the industry.
Doge’s methodology for calculating savings has come under scrutiny, particularly for valuing cancelled contracts at their legal maximums and quietly revising figures following media inquiries.
While Booz Allen continues to advocate for its value in modernizing government infrastructure, its sharp pivot to layoffs and downward revisions has shaken confidence in a sector long seen as recession-proof — and now increasingly vulnerable to the whims of Washington.
