Booz Allen Hamilton Holding Corporation (NYSE:BAH) is planning to cut about 2,500 jobs as it feels the impact of reduced federal spending under the Trump administration.Booz Allen Hamilton Holding Corporation (BAH) Slashes 2,500 Jobs in Response to Federal Spending Reductions Under Trump

The consulting firm, which earns 98% of its $12 billion in annual revenue from government contracts, is particularly exposed to changes in federal budget priorities.

Since 1940, when Booz Allen Hamilton Holding Corporation (NYSE:BAH) began advising the U.S. Navy in the lead-up to World War II, the firm has maintained a strong presence within the federal government. In 2008, the company split its operations, spinning off the corporate consulting side while keeping the government-focused business under the Booz Allen name.

CEO Horacio Rozanski told investors that while Booz Allen Hamilton Holding Corporation (NYSE:BAH) had anticipated some changes with the new administration, the pace and intensity of the cutbacks have exceeded expectations.

The job reductions, which make up around 7% of Booz Allen's workforce, will mostly affect its division that works with civilian government agencies. The company is also streamlining management layers to adapt to the shifting environment.

Shares of Booz Allen Hamilton Holding Corporation (NYSE:BAH) dropped 16.5% on Friday after executives warned of weaker government spending and a tough first half ahead. The firm also reported lower-than-expected revenue growth for the recent quarter and issued cautious guidance for the fiscal year.

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