Tech Job Losses Decline

Job cuts announced by high-tech firms plunged to 61,032 in the first quarter of this year, down 45 percent from the 110,247 layoffs announced over the same period in 2002, according to Chicago-based outplacement firm Challenger, Gray & Christmas.

The drop was mainly due to a decline in job cuts in the telecommunications industry, which posted 15,862 cuts in the first three months of 2003, down 81 percent from the 82,522 job losses announced in the first quarter of 2002, Challenger said.

Making Cuts

Meanwhile, however, other segments of the technology sector--electronics, computers, and e-commerce--cut more jobs in the first quarter of this year than they did a year ago. Electronics companies eliminated 26,270 jobs, up 101 percent from the 13,062 cuts announced a year ago.

Computer manufacturers cut 17,088 jobs, up 29 percent from the 13,212 posted in 2002. And e-commerce companies have recorded 1812 cuts so far this year, up 28 percent from the 1415 layoffs announced last year, Challenger said.

Through the first three months of 2003, IT layoffs represented 17 percent of the 355,795 job cuts posted by all industries--in sharp contrast to the past two years, when technology cuts accounted for 33 percent of the 1,466,823 jobs lost in 2002 and 36 percent of the 1,956,876 job cuts announced in 2001, according to Challenger.

"With many of the weakest telecommunications companies now out of business or swallowed up by stronger firms, we could see a stabilization in terms of job cutting in this industry," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Ready to Rebound?

Nevertheless, Challenger said, the war in Iraq and the unwillingness of companies--both in the U.S. and abroad--to invest in new equipment could continue to hamper the creation of new jobs in the industry. That same uncertainty may also hinder corporate spending on computers and other electronic equipment.

"To make matters worse, many of the jobs lost in these industries may not come back, as more and more tasks are shipped to suppliers and service providers overseas, where tech labor is cheaper," Challenger said.

But Challenger noted some signs that a high-tech rebound may not be too far off.

"Fourth-quarter [gross domestic product] numbers showed that spending on technology equipment and software increased 5 percent, marking the third consecutive quarterly increase after six straight quarters of decline," Challenger said.

According to Challenger, the areas that could see new job creation include information security, business information management, Web services, wireless technology, remote connectivity, customer relationship management, privacy, and disaster-recovery planning.