Hit hard by federal consulting cuts, Deloitte begins layoffs

Deloitte has been hit hard by a US government crackdown on consulting contracts, with at least 129 contracts terminated or cut back – more than double any other affected consultancy. The Big Four firm has opted for layoffs in response to the contract cull.

The hit to Deloitte contracts was unveiled in data released by Elon Musk’s Department of Government Efficiency (Doge), though much of that data has repeatedly been put into question. Last month, Doge appeared to have overstated the amount of money they had supposedly saved the government by billions of dollars.

In any case, there was a call between Deloitte executives and workers earlier this week, reported by the Wall Street Journal, in which the firm broke the news that it would be laying off some employees. Deloitte did not respond to request for comment from various media outlets.

Deloitte’s government contracts reportedly brought in around $3.2 billion in 2024. But since the Trump administration set Elon Musk’s Doge loose, many of those contracts were suddenly on the cutting block.

The Government Services Administration (GSA) has been a primary target in Doge’s mission to cut consulting contracts. The GSA is the government’s procurement arm in charge of providing federal agencies with a wide range of products and services, in addition to constructing and managing facilities.

The cost-cutting efforts at GSA are being led by commissioner Josh Gruenbaum of the Federal Acquisition Service (FAS), age 39, who previously worked at KKR & Co. and investment bank Moelis & Co.

Gruenbaum was appointed by US President Donald Trump to apply his experience in private equity to the task at hand: cutting costs at the FSA, a rather obscure agency under the GSA that is in charge of delivering products and services across the government at the best value possible.

The FSA issued a warning that firms need to report exactly what they are doing, in plain language and without using what the GSA termed “jargon or gobbledygook,” a sharp jab at the notoriously vague ‘consultancy speak’.

The GSA sent a letter to the top 10 firms with the highest value federal government contracts, which requested extensive documentation on those contracts in order to reduce or eliminate spending.

“Do not submit a scorecard that does not identify any waste and spend reduction opportunities,” wrote Gruenbaum in the letter. He warned that any firms that did not identify any waste would be deemed “unaligned with the administration’s cost cutting goals.”

Gruenbaum additionally requested that firms make recommendations on how they could aid in reducing pricing, adding that it should be done in language that “a 15 year old should be able to understand.”

Overall, the GSA canceled around 1,700 consulting contracts in total, according to data the agency provided to Bloomberg News. That figure is likely to continue to grow as assessments of the myriad consulting contracts are still underway.

Another firm major consulting hit hard by the cuts to consulting contracts is Accenture. Federal services reportedly accounted for around 8% of the firm’s global revenue and 16% of revenue in their US business in 2024. Other firms affected include Booz Allen Hamilton, Guidehouse, General Dynamics, IBM, Leidos, and more.

Layoffs inbound

According to a WSJ report, Deloitte is laying off US workers in government consulting and other advisory services areas.

The Big Four firm is “taking modest personnel actions based on moderating growth in certain areas, our government clients’ evolving needs and low levels of voluntary attrition,” a US spokesman told the WSJ.

The Big Four accountancies and Big Three strategy firms made layoffs in 2023 after years of pandemic-fueled hiring and low attrition outstripped slowing demand for advisory services in transactions, IT, and other areas.