By Chip Cutter and Denny Jacob

Booz Allen plans to cut roughly 2,500 jobs after the company warned that it is feeling the effects of the Trump administration's crackdown on federal contracting.

Shares fell more than 15% in Friday trade after Booz Allen executives told investors that the firm is seeing a slowdown in some government spending and that it expected its business to be under pressure in the first half of the fiscal year.

Booz, which makes 98% of its $12 billion in annual revenue from government-related work, is especially vulnerable to the Trump administration's plans to cut spending on federal contracts.

The company had expected some disruption as the new administration came into power, but "we now see that these dynamics are indeed in play at a rate and speed that is beyond what we originally expected," Chief Executive Horacio Rozanski said on a call with investors.

Booz expects to cut 7% of its workforce, largely in its division that deals with civilian government agencies. It will also reduce layers of management as it works to reposition the company.

Booz also posted revenue growth that came in below expectations in its latest quarter and issued guidance for the current fiscal year that underwhelmed.

For weeks, officials within the General Services Administration, which helps oversee procurement for the federal government, have pushed consulting companies including Booz Allen, Accenture, Deloitte and IBM to justify their work with the government and to propose substantial cost savings.

Rozanski previously told The Wall Street Journal that Booz had proposed more than $1 billion in savings on its government projects.

On Friday, Rozanski said that only about 1% of the McLean, Va., firm's contracts had been canceled outright. But he said that the company is seeing a decrease in the pace of contracts awarded for nondefense work and that the firm expected business to decline in the coming year as the government reins in spending.

Booz Allen should benefit from efforts to modernize the government, embrace artificial intelligence and upgrade existing technologies, Rozanski said on the call with investors. It anticipates growth in its defense and intelligence operations.

Other firms have also seen the impact of the administration's contract reviews. IBM told investors last month it had some government contracts canceled. Accenture CEO Julie Sweet in March said "many new procurement actions have slowed, which is negatively impacting our sales and revenue."

Write to Chip Cutter at chip.cutter@wsj.com and Denny Jacob at denny.jacob@wsj.com

(END) Dow Jones Newswires

May 23, 2025 15:15 ET (19:15 GMT)

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