McLean, Virginia-based Booz Allen, a consultancy specializing in technology solutions, especially for the public sector, has announced a major 7% reduction in its workforce based on reduced federal spending and the end of a VA contract.
The reduction will impact approximately 2,500 employees, mainly in its civil division, by the end of June 2025.
According to Chairman, CEO and President Horacio Rozanski,
On the talent front, Booz Allen closed the fiscal year with nearly 36,000 employees. Our customer facing staff grew 4.2% year-over-year. Due to the contract impacts we've described, we anticipate that we will see an approximately 7% reduction in Booz Allen staff in the first quarter. This is very heavily concentrated in our civil business.
I am incredibly proud of the people of Booth Allen for their dedication and hard work over the past three years. These results are a credit to them. Through a changing landscape, we remain focused on delivering outcomes, and bringing their passion and commitment to America's most essential missions. A heartfelt thank you to our colleagues for all you do for our company, and for our nation.
We believe that our defense and national security portfolio will continue to grow this year, as we accelerate the injection of AI and commercial technology into missions. In contrast, we expect our Civil business to decline this year. Diving more into civil. Our largest contracts have been reviewed. We are proud that our solutions stood up well, and our contracts are mostly intact. The work is excellent and the missions are critical.
Having said that, the run rate on five large technology contracts has been reduced significantly in support of the administration's desire to reduce spending overall. This slowdown coincided with the ending of a large technology contract at the VA. Together this led to a significant number of employees needing to be redeployed simultaneously. Under normal circumstances and as our history shows, 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. As we proactively anticipate continued market and budget dynamics, we have made the decision to restructure and reset our civil business.
We are making targeted cost and head-count reductions to match anticipated demand. These are a combination of reductions in bench, delayering of management and adjusting our infrastructure to match. These decisions are difficult, and they are not taking lightly. Our actions are very targeted, and we believe that they will preserve and enhance our ability to invest both in our business and in our people. Matt will cover all the details of our FY '26 outlook in a few minutes.
Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life or promises for a bright future. We see good people being laid off through no fault of their own. Just because something terrible hasn't happened yet doesn't mean it won't. It can happen to anyone, anytime, anywhere. No one is guaranteed to wake up tomorrow and still have a job by evening. While many employees can read the writing on the wall, why do most assume it’s targeted at someone else? Are you now wondering, Am I Next?