Booz Allen to Lay Off 7% of Workforce Amid U.S. Government Budget Cuts

Booz Allen Hamilton, one of the largest U.S. government contractors, will lay off 7% of its global workforce—roughly 2,500 employees—by the end of this quarter. The announcement came Friday as part of the firm’s quarterly earnings report, which revealed a significant downturn in civil-sector project funding.

Nearly one-third of Booz Allen’s revenue comes from civil contracts with the U.S. government, many of which have been reduced or eliminated, according to Bloomberg, as reported by the company during its earnings call.

Federal Cuts Hit Civil Contracts

Much of the restructuring stems from the U.S. government’s tightening of discretionary spending across civilian agencies. Booz Allen reported a reduced pipeline of renewals and new civil-sector contracts.

While the defense and intelligence divisions remain strong, the company said it has “no choice” but to scale back civil projects and related staffing in response to changing government priorities.

Stable Growth in Defense and Intelligence Divisions

Despite the layoffs, Booz Allen stated that its defense and intelligence sectors are performing well and are expected to contribute to the firm’s long-term strategic growth. These areas represent a majority of the firm’s portfolio and continue to receive robust support from Congress and the Pentagon.

As quoted by Bloomberg, company executives emphasized that these divisions remain “well-capitalized and aligned with federal mission-critical spending.”

Layoffs to Begin This Quarter

The layoffs will occur over the current quarter and will mostly affect roles tied to civilian agencies, health initiatives, and infrastructure contracts. Booz Allen said it is offering severance packages and transition assistance to affected employees.

The news marks one of the largest workforce reductions in the firm’s recent history and could signal broader industry impacts if the federal budget outlook continues to tighten.