Lockheed Martin Corp.’s information technology group offered voluntary layoffs to midlevel managers, the latest maneuver among large defense contractors to stop the bleeding at their struggling IT businesses.
“Lockheed Martin Information Systems and Global Solutions is offering a voluntary layoff program to a select group of midlevel managers across the business,” confirmed company spokeswoman Nettie Johnson. “The reduction in force is designed to best position the business to remain competitive and operationally efficient, providing the most affordable solutions to our customers.”
The effort reportedly will reduce the workforce of about 30,000 for the Gaithersburg-based group by 300 to 350 employees.
The program was announced internally on Feb. 4. Eligible employees accepted for the program will leave the company March 22.
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IT work, once the gold mine of federal contracting, is now getting hit hard by constrained federal spending, primarily because of the shorter funding cycle: While large weapons programs get funded years in advance, IT gets funded at the time of implementation. Therefore, as agencies look for places to trim, planned IT programs that don’t yet have the dollars set aside are an easy target. Lower-end IT projects also tend to be viewed as less mission-critical.
This new reality is reflected in earnings. Revenue for Lockheed Martin’s Information Systems and Global Solutions group dropped from $9.4 billion in 2011 to $8.85 billion in 2012. The IT groups of General Dynamics Corp. and Northrop Grumman Corp. dropped 11 percent and 7 percent respectively during the same period.
Beyond layoffs, Lockheed, General Dynamics and Northrop have all spoken about refocusing the IT portion of the businesses to put more emphasis on higher-margin areas and to shed low-end services.