Thousands of former federal employees are now looking for work due to job cuts carried out by President Donald Trump’s administration during the first few months of this year. The layoffs were directed by the Department of Government Efficiency (DOGE), a cost-cutting initiative led by billionaire Elon Musk.
DOGE targeted consulting firms among its next spending cuts, and the moves seem likely to spur another outflow of employees with federal sector experience looking for new work.
How DOGE cuts could affect the consulting workforce. In February, the acting administrator of the General Services Administration called on federal agencies to cut “non-essential consulting contracts” with the top-10 highest-paid firms, including Deloitte, Accenture, IBM, and Booz Allen Hamilton. And on Thursday, Defense Secretary Pete Hegseth announced that the Pentagon was cutting over $5 billion worth of contracts with multiple consulting companies, including “Accenture, Deloitte, Booz Allen, and other firms that can be performed by our civilian workforce.”
The GSA asked these firms to conduct a review justifying their work with the federal government, resulting in concessions from the consultancies amounting to billions of dollars in spending cuts.
At least one consultancy has already confirmed it will lay off workers following the GSA review, with Deloitte saying it will take “modest personnel actions” in the coming weeks, the Wall Street Journal reported on Apr. 3. The CEO of Booz Allen Hamilton, which generates a whopping 98% of its revenue from government-related work, told the Journal “time will tell” if consultants will lose their jobs as a result of the cuts, suggesting that some of this workforce could be reallocated to technology firms.
Typically, consultants are allowed to spend time networking in between projects—known in the industry as being “on the bench” or “on the beach”—before being let go, but Accenture reduced this period to just four weeks, Business Insider reported.
The shortening of bench time is “unprecedented,” said Namaan Mian, chief operating officer at Management Consulted, a coaching and training organization that helps prospective candidates land jobs at consultancy firms. “We’ve been covering the consulting industry since the Great Financial Crisis. We didn’t even see this happen in 2008, 2009,” he said. Consultancies are typically “forward-thinking,” and will keep consultants on the bench if “they know there’s more work coming.”
“If you are going to reduce or eliminate that beach time, then what you’re passively admitting is that your pipeline is nowhere near as healthy as it once was,” he added.
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Where consulting talent might go next. Public sector consultants who lose work due to the DOGE-related cuts may face a challenge if they want to pivot to commercial sector projects within their firm, Mian noted.
“Recruiters and hiring managers on the commercial side of the house sometimes struggle to see the applicability of government work,” he said. Oftentimes public sector consultants are focused on more than just financial outcomes, aiming “to meet the goals of a particular agency or a particular administration.” They also tend to function more like a contractor, embedding into government agencies for 18 months at a time, for example.
That said, recruiters outside of the major consulting firms—say, in state government or elsewhere in the private sector—might benefit from the outflow of talent. States like Wisconsin, New York, and California are already openly recruiting federal workers who lost their jobs due to the administration’s cuts.
“There’s an opportunity here for state governments to get access to talent they’ve never had access to before,” Mian said.
The federal government might end up needing consultants with public sector chops sooner than they think due to the scale of job cuts taking place at their own agencies, he predicted. Layoffs jumped 60% in March, with the majority coming from the federal government, and the Department of Health and Human Services started laying off 10,000 workers during the first week of April.
“In the short term, this is actually good news for consulting firms,” Mian said. “When you cut headcount quickly, where do you turn to for short-term help? You turn to consulting firms who can give you staff that are ready to start immediately.”
A “rebound” could occur later in the year, said Tom Rodenhauser, managing partner of Kennedy Intelligence, a research firm that tracks the consulting industry. This happened during the Covid-19 pandemic, when consulting saw a “dramatic downturn” but quickly surged as clients tried to figure out their response.
“The government will seize up, and they’ll have to turn to the consultants to fix things and step back in,” he said.
Unless, of course, they don’t, Rodenhauser continued. “There may be a stubbornness to just say, ‘okay, let it break,’ and the consultants aren’t called back, and as a result, everything kind of goes to hell.”