Booz Allen Hamilton Holding Corp. plans to cut about 2,500 jobs, roughly 7% of its workforce, as the consulting firm feels the impact of decreased federal spending under President Donald Trump.
Impact on Workforce
- The majority of the cuts will affect the company’s division working with civilian government agencies.
- The decision to reduce staff comes as Booz Allen is streamlining management layers in response to a changing environment where budgets are being tightened across various sectors.
CEO Horacio Rozanski stated during an earnings call, "We are taking steps to adapt to a changing environment where budgets are being tightened across various sectors."
Financial Performance
- Shares fell nearly 17% on Friday after executives warned of weaker government spending and a tough first half ahead for Booz Allen.
- The firm reported lower-than-expected revenue growth for the latest quarter and issued cautious guidance for fiscal-year results.
Company Background
Booz Allen has been one of Washington’s largest employers since its founding in 2008 through a merger between two smaller companies that were spun off from Booz & Co., which itself was spun off from accounting giant PricewaterhouseCoopers in 2008. The company has grown rapidly over the past decade but has faced challenges since Trump took office in January 2017, leading to reduced federal spending on defense contracts and other areas that had been lucrative for Booz Allen.
Recent Developments
- Some areas have seen increased funding under Biden administration policies aimed at addressing issues such as climate change and cybersecurity threats. However, these gains have not offset losses elsewhere due to reduced funding on defense contracts and stalled infrastructure projects amid partisan gridlock.
- Rozanski mentioned that he expects this year’s revenue growth rate to be lower than last year’s due to "more uncertainty" about future government spending levels.
Leadership Changes
Shares fell $13.15 Friday afternoon after a decline of $3 earlier in trading, following news that Chief Financial Officer Lloyd Howell would leave his position effective June 30th after less than three years leading finance operations at Booz Allen. Howell joined Booz Allen from General Dynamics Information Technology Inc., where he served as chief financial officer until November. He succeeded Kevin Cook, who left his post shortly after becoming President-elect Joe Biden’s nominee for comptroller general.
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