[T]he consultancy industry now faces a reckoning. A chainsaw-wielding Elon Musk and his so-called Department of Government Efficiency (Doge) have pledged to cut $1tn out of the federal budget. The slash-and-burn approach has already resulted in thousands of federal lay-offs. Management consulting contracts may be next on the chopping block.
Among Big Consultants, Booz Allen Hamilton looks the most exposed. The company, which split from its private sector consulting arm in 2008, generates nearly all of its revenue from the public sector. This has more than doubled over the past decade to $11bn in its last fiscal year. Its shares are down 43 per cent since the election of Donald Trump in November.
At Leidos Holdings, where US government contracts accounted for about 87 per cent of total revenue last year, shares have fallen more than a third.
Size has offered little succour from the Doge-induced anxiety. Consultancy group Accenture, which receives about 8 per cent of its revenue from the US government, according to analysts at Mizuho Securities, has lost about 14 per cent of its market value over the past month.
Not all government contracts are equally vulnerable. Those that the GSA is reportedly looking to cull are so-called Oasis contracts that cover professional services such as management and consulting, engineering, logistics and financial services.
This means companies that focus on technology-centric services such as cyber security or artificial intelligence should be less affected. Palantir Technologies — the AI-powered data analytics firm co-founded and chaired by Peter Thiel, a longtime Musk associate — may be a case in point.
Lambert here: This is March 2025, i.e. early. I wonder if all the assaults on consultants misfired as badly as Leidos?
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