McLean-based Science Applications International Corp. said Tuesday it plans to let go 700 employees — about half of whom are locally based — as the contracting giant seeks to cut costs to remain competitive in the federal marketplace.
The company said in a statement that the reductions will cut across its ranks and locations but are meant to have a limited “impact on those who are delivering directly to our customers.” SAIC said it would provide job training and career coaching to those affected.
“These decisions were not easily made but we firmly believe that they are absolutely necessary in order for us to remain competitive,” John Jumper, SAIC’s chief executive, wrote in an e-mail to the company’s employees.
SAIC is giving employees two months’ notice, meaning they will depart in early February, according to a company spokeswoman.
The contractor previously had 40,000 full-time employees, about 15,000 of whom are based locally. The spokeswoman said about 330 local employees will be cut.
The move comes as SAIC is preparing to split itself into two businesses: a $4 billion-a-year government services company specializing in areas such as systems engineering and program office support, and a $7 billion-a-year technology business with a focus in areas including intelligence and cybersecurity.
SAIC announced last month that Jumper will head the larger of the two businesses. Tony Moraco, who heads SAIC’s intelligence, surveillance and reconnaissance group, will lead the smaller company.
The split is expected to be complete by the end of next year.
SAIC said the reductions were unrelated to the split. The company, like many other government services contractors, has been facing declining profit and a more challenging budget environment.
Contractors have said the government is becoming increasingly cost-conscious when it puts work out for bid, and procurement officers will often prioritize price over other evaluation criteria.
“In order to be successful, we must submit rates that allow us to remain competitive,” Jumper wrote in his e-mail to employees.
In its most recent quarter, SAIC reported a profit of $110 million (32 cents per share) in the three-month period ended July 31, down 38 percent from $178 million (50 cents per share) in the same period a year earlier.
Still, quarterly revenue grew by almost 10 percent, to $2.8 billion.
SAIC is scheduled to announce third-quarter earnings Wednesday.