Booz Allen Hamilton to cut 7% of staff amid shifting federal priorities

Management consultancy behemoth Booz Allen Hamilton will lay off 7 percnet of its workforce, eliminating about 2,500 positions, as federal agencies tighten spending and rethink priorities The move, largely hitting the firm’s federal civil division, was announced by CEO Horacio Rozanski during an earnings call on Friday as reported by the Washington Business Journal.

Rozanski cited an “acute” decline in agency awards and contract modifications within civilian agencies as the federal government pursues efficiency and cost reductions. “The federal government is rethinking agency missions, finding ways to accomplish those missions differently and looking for ways to reduce spending,” Rozanski said.

Booz Allen’s civil business is expected to see a low double-digit revenue drop in the current fiscal year, which began 1 April. Chief Financial Officer Matt Calderone disclosed that reductions in several large civil contracts will create an additional 3 percent revenue headwind for fiscal year 2026. This comes on top of losses from a recent Department of Veterans Affairs contract.

The consultancy, which primarily serves federal clients (98 percent of revenue), had ramped up hiring in recent years to a total headcount of 35,800 as of 31 March. The cuts reflect broader belt-tightening in the federal contracting sector; other prominent firms, including Deloitte and Accenture Federal Services, have also undergone contract reviews.

Despite the downturn in its civilian business, Rozanski remains bullish on Booz Allen’s defense arm, pointing to anticipated growth areas such as southern border security, space initiatives, and artificial intelligence-driven military partnerships with firms like Shield AI and Palantir.

The restructuring news weighed on Booz Allen’s stock, which fell nearly 14 percent Friday as analysts downgraded the company on expectations for slower revenue growth.