Pace of Tech Layoffs Eases--Except in Telecom

By eweek  |  Posted 2002-07-08

While the pace of layoffs in much of the technology sector slowed dramatically in the first half of the year, the telecommunications industry continued to set job-cut records, according to recently released research from Challenger, Gray & Christmas Inc.

Telecommunications companies cut 165,840 jobs from January through June, according to the Chicago-based outplacement services company. Thats up from 130,442 job cuts in the sector through the first half of 2001. Telecom layoffs represented one in four job cuts across all U.S. industries during the first half of the year, according to the research.

Overall, layoffs at technology companies—telecom, computer, electronics and e-commerce providers—were down 22.5 percent, from 313,939 in the first half of last year to 243,200 through June of this year, according to Challenger.

Helping to offset the rise in telecom layoffs were lower job-cut figures at computer, electronics and e-commerce companies. Job cuts at computer companies dropped 25.9 percent, from 74,723 in the first half of 2001 to 55,398 through the first six months of this year. Layoffs among electronics companies fell by 65.8 percent, from 59,181 to 20,221, and cuts among e-commerce providers fell 96.5 percent, from 49,593 in the first half of last year to just 1,741 through June 2002.

While the moderating layoff pace in e-commerce seemed encouraging, Challenger, Gray & Christmas CEO John A. Challenger said the lower job-cut figures in that sector reflects in part the fact that many providers have simply gone away. "Its tough to gauge how much the slower job cuts reflects an overall improvement in the market," Challenger said. "Certainly there are fewer jobs in the e-commerce sector than there were a year ago."

Nor did the Challenger report predict that the slowing job-loss pace in the first half of 2002 necessarily predicts a sustained improvement in the tech job market. Providers like WorldCom Inc. continue to struggle. In fact, the company has announced plans to lay off 17,000 employees.

At the same time, computer and electronics companies could be in for more cuts, the report said, in light of recently weakened consumer demand for electronics products.

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