Report: Dot-Com Job Cuts Hit 19-Month Low

The number of dot-com job losses fell sharply in January, marking the third straight month of decline, according to a report released Wednesday by outplacement firm Challenger, Gray & Christmas.

During January, 1,802 Internet job cuts were announced — 25 percent fewer than the 2,403 made public in December 2001.

In fact, January showed the smallest number of layoffs in 19 months, since June 2000.

“The dot-com environment is now through much of the shakeout period,” CEO John A. Challenger told the E-Commerce Times. “What we’re dealing with now is companies looking for ways to run their operations better. The layoffs now tend to be more about operational efficiency.”

In comparison, last January saw 12,828 job cuts, as now-defunct companies such as EToys and Kozmo.com shed employees in last-ditch efforts to remain afloat.

Positive Trend

For the most part, the number of Internet-related job cuts has been falling since June 2001. The sole exception to the trend was last October, when layoffs spiked as companies — especially those involved in online travel — scrambled in the wake of the events of September 11th.

Challenger’s running tally now puts the number of dot-com jobs lost since December 1999 at 144,242.

More than 100,000 of those layoffs came in 2001, with the vast majority occurring during a 10-month stretch beginning in October 2000, when the dot-com shakeout began in earnest. Between that month and July 2001, 75 percent of all Internet-related job cuts recorded to date were announced.

The wave of layoffs peaked in April 2001, when more than 17,000 Internet workers lost their positions.

Software Struggles

Challenger said the technology sector, which includes software and services, took the heaviest hit in January, with 1,079 cuts.

Consumer services firms, such as Web travel and financial sites, posted the second-largest number, at 492. Challenger, Gray & Christmas counted 121 job cuts in the online retail category, 95 at Web portals and 15 in online media.

Getting Specific

Among the firms announcing job cuts in January were Forrester Research (Nasdaq: FORR), a Cambridge, Massachusetts-based Internet and technology research firm, which cut 126 workers or 20 percent of its workforce.

Web currency firm GiftCertificates.com, e-tailer 800.com and content and commerce site CitySearch.com also have been in the news in recent weeks for laying off workers.

Challenger said he sees a period of stabilization, but not necessarily a quick return to job creation by dot-coms.

“It seems to me that the companies that have been successful and have made it this far are going to continue to get smarter about how to get by and wait for real growth opportunities before adding workers,” Challenger said. “The real job growth is happening in the back rooms of traditional companies all over the country.

“In that sense, the e-commerce revolution is proceeding apace,” he added.