Report: High-Tech Job Cuts Down from Last Year

The number of high-tech layoffs in the first quarter fell 45 percent compared with a year ago as stabilization in the telecommunications industry helped slow the pace of job cuts, according to a new report from outplacement firm Challenger, Gray & Christmas (CGC).

Chicago-based CGC tracked 61,032 layoffs during the first three months of 2003, well below the first quarter of 2002’s tally of 110,247.

The dropoff was attributed almost entirely to the telecom sector, which was battered by scandals and layoffs last year and cut some 82,522 jobs in the first quarter of 2002, compared with just 15,862 this year.

Dark Clouds

In fact, telecom stabilization may cover up continued weakness in other sectors, CGC CEO John A. Challenger told the E-Commerce Times. Layoffs by electronics firms actually doubled in the quarter to 26,270. Job cuts at computer makers rose 29 percent, and e-commerce firms laid off 28 percent more workers than a year ago.

“Many of the jobs lost in these industries may not come back,” Challenger said. “More and more tasks are being shipped to overseas suppliers and service providers, where tech labor is cheaper.”

Still, technology companies are faring better than their counterparts. In the first quarter, tech firms made up 17 percent of the 355,795 layoffs in all industries. In contrast, tech cuts made up 33 percent of the 1.4 million job cuts announced in 2002 and 36 percent of the nearly 2 million recorded in 2001.

A Different Year

The telecom stabilization is no surprise, Challenger noted, since the industry shed more than 500,000 jobs in 2001 and 2002 alone.

“Many of the weakest companies are now out of business or have been bought up,” he said. But the timing of any resurgence in job creation will depend largely on the global political situation, which is believed to be hampering investment in new equipment.

Going Up, Still

Meanwhile, a recent report from Meta Group contained more good news for highly skilled IT workers.

The Stamford, Connecticut-based research firm said in its annual IT salary report that IT salaries are rising an average of 5 percent, with some specialties on track to see increases of up to 10 percent. Technical workers will see raises that outpace those of non-tech employees.

“We expect IT compensation to actually rise, in some cases at the expense of non-IT employees,” said Meta Group program director Maria Schafer, adding that salaries continue to grow even though most companies say their overall IT budgets will be flat or even shrink.

Meta said more than half of the firms it surveyed plan to offer cash bonuses to IT workers in 2003, while 44 percent continue to use cash hiring bonuses to lure high-level IT employees.

Situation Desperate

But Challenger said that for unemployed technology workers, the situation is growing desperate. He cited the example of a software firm that received 200 resumes in two days for an unpaid position as a trainee with no guarantee of full employment.

His advice for unemployed workers is to focus on honing their skills in areas that are poised to grow, such as information security, Web services, wireless technology, customer relationship management, privacy and disaster recovery planning.