Booz Allen cuts ranks to reduce costs, increase competitiveness

Booz Allen Hamilton, citing “these challenging times,” is laying off some of its senior and middle managers, the company announced today without providing specific numbers or precisely who will be affected.

“To ensure that Booz Allen will succeed – and lead – in this difficult market, we are taking bold action to be out in front,” a company statement sent today to Washington Technology said.

The statement said the personnel cuts will make the company more cost-competitive by “taking cost out of our infrastructure and overhead. And, we will further shift resources and increase our investments in growth areas across government, commercial, and international such as cyber, health, C4ISR, and finance.”

Ralph Shrader, company chairman, president and CEO, earlier in the week sent a companywide memo outlining the personnel action and acknowledging that “Our growth rate today is significantly lower than in the past,” according to today’s Washington Post.

“We are taking bold action to be out in front. We will become more cost-competitive to win and deliver premier services in all of the markets we choose to serve,” Shrader said in the memo.

“These changes will not be easy, and I assure you, they are not being undertaken lightly,” he said. “The hardest thing I have to do in my job is to tell a long-serving partner or hard-working staff member there is no longer a position in the firm.”

But the changes “will make Booz Allen a more successful, secure, and exciting place to grow and excel,” he added. “When I look back — and more importantly, look forward — bold action is what propels us ahead. The future is ours to lead.”

William Loomis, managing director at financial services firm Stifel Nicolaus Weisel who follows Booz Allen, said the company has done better than nearly all of the bigger government contractors in gaining market share and improve margins in recent years.

“They’ve executed quite well in an environment that a lot of people in the industry say they haven’t seen as this difficult in over 20 years,” he said.

Booz Allen “can put their name on a long list of companies around the Beltway that had to do similar things because of the difficult market. And I think that we’ll see more [layoffs] over the next couple of years,” Loomis said.

However, noting that the cuts will affect mainly partners and other veteran professionals, he added, “Booz Allen relies on its top managers for revenue and when you have to reduce your workforce at that higher end, in my opinion it means that the revenue outlook is a bit dimmer than we thought.”

Booz Allen Hamilton, of McLean, Va., ranks No. 9 on Washington Technology’s 2011 Top 100 list of the largest federal government contractors.

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