Report: Tech Sector Layoffs Down in Q3

Despite high-profile layoff announcements from IBM and others, the third quarter was a relatively quiet one for job cuts in the technology sector, according to a new report from Challenger, Gray & Christmas.

The Chicago-based outplacement firm counted 91,450 announced job cuts in the quarter ended September 30th, down 31 percent from the second quarter, when cuts topped 132,000.

Layoffs were also down 57 percent from the same period a year ago, when more than 213,000 jobs were slashed. In fact, this year’s third quarter was the slowest period for layoffs since the fourth quarter of 2000, when high-tech firms announced 43,175 job cuts.

Wait and See

CEO John A. Challenger told the E-Commerce Times that it is “impossible to tell” whether the reduced cuts indicate the start of a turnaround.

“Most high-tech indicators have not shown much promise,” Challenger said. “We’ve been surprised in the past by how quickly the numbers can go up or down in a single month, which just underscores the volatility of this economy.”

In fact, Challenger’s report coincided with mixed news from various other sources. For example, data storage giant EMC announced Thursday that it will cut another 1,350 workers worldwide. EMC CEO Joe Tucci said the company faces a “brutal” tech spending environment and admitted, “We don’t know when IT spending growth will resume.”

Boosting the uncertainty factor, the U.S. government reported that the jobless rate fell in September to 5.6 percent, the lowest level in seven months, surprising many economists who expected an increase.

Final Quarter

Challenger warned, however, that the fourth quarter can be a time of stepped-up cost-cutting as companies get a better idea of whether they will meet annual targets and as they begin to see what 2003 might bring in terms of business flow.

“Some companies may be down to bare bones now and cannot afford to eliminate any more jobs without going out of business,” he said. “Some major employers still have a lot of room to make cuts and may be forced to do so soon if capital spending does not increase.”

Telecom Healing

In the third quarter, Challenger said that fewer telecommunications sector job cuts helped soften the blow of scattered layoff announcements. IBM confirmed in August that it was in the process of cutting 15,000 jobs, and TMP Worldwide, the parent company of online job board Monster.com, said it was raising its layoff target to 1,000 workers.

In fact, telecom cuts fell 52 percent compared with the second quarter, which saw widespread layoffs at WorldCom and other companies.

One area that saw job cuts spike was the electronics industry, where cuts rose 175 percent to 19,716.

In addition to the decrease in number of overall tech layoffs, Challenger said it will not produce a dedicated dot-com job cuts report because the figures are too low to warrant a breakout study.