Tech Job Cuts Leap 60%

Announced job cuts in the technology sector soared 60% in the third quarter to 54,701, the highest figure since the fourth quarter of 2003 (82,328).

The leading factor behind the increase was a dramatic 127% surge in the number of job cuts among computer-related firms, according to the quarterly report on high-tech job cuts released Monday by Challenger, Gray & Christmas, a global outplacement firm.

Computer-related companies announced 30,624 job cuts in the third quarter, 56% of the 54,701 cuts in the technology sector, which includes computer, electronics, telecommunications, e-commerce, and IT service vendors.

Third-quarter technology cuts were up 60% from 34,213 job cuts in the previous quarter and were 14% higher than the 47,998 job cuts announced by the tech sector in the third quarter a year ago.

So far this year, high-tech firms have announced 118,427 job cuts, which account for 16% of the 724,320 announced job cuts from public and private companies in all industries through September 30.

Job cut numbers reflect announced and planned workforce reductions. This is different from the Bureau of Labor Statistics unemployment figures, which track all unemployed persons in the U.S.

The percentage of high-tech cuts has increased since the second quarter when they represented 13.5% of all job cuts.

The Challenger report shows that in addition to the increase in computer-industry job cuts, employers in telecom, electronics and e-commerce also boosted downsizing activity during the quarter.

Telecommunications saw an eight-percent increase from 18,368 to 19,825; electronic firms cut 4,092 jobs in the third quarter, up 75% from 2,338; and e-commerce went from 42 cuts in the second quarter to 160 in the third.

Making matters worse, is that increased job cutting is not being offset by increased hiring. A recent survey by the Information Technology Association of America (ITAA) found that employers will hire 270,000 fewer business-technology workers this year than in 2003.

A separate report by Robert Half Technology found that only nine-percent of 1,400 CIOs surveyed plan to expand their IT staffs in the fourth quarter of 2004.

“There are certain areas in the technology sector that are thriving. Demand is high for those who specialize in network and IT security,” said John Challenger, chief executive officer of Challenger, Gray & Christmas. “Tech support is another area looking for people. However, it could be some time before overall technology job creation returns to the pace we saw in the late 1990s.”

“That may happen only when baby boomers begin leaving the work force en masse due to retirement. At that point, many industries, including technology, could be struggling to find skilled workers,” he added.