Despite a surge in tech-sector downsizing in the second half of 2011, the number of job cuts announced by these firms last year plunged to the lowest level ever recorded in tracking going back to 1997, according to the latest report on technology sector job cuts released Jan. 23 by outplacement firm Challenger, Gray & Christmas. Technology firms, including those in the computer, electronics and telecommunications industries, announced a total of 37,038 planned job cuts in 2011, down 21 percent from 46,825 in 2010. The year-end total was down 79 percent from the recent peak of 174,629 recorded in 2009, when the recession was at its worst.
The decline in technology job cuts occurred as overall job cuts increased. The number of job cuts announced across all industries rose 14 percent from 529,973 in 2010 to 606,082 in 2011. The technology sector accounted for 6.1 percent of the 2011 total. That is the lowest percentage of tech-sector cuts on record, falling from last year’s record low of 8.8 percent.
Technology job cuts did surge in the second half of 2011, raising concerns about whether the upward trend will continue into 2012. From January through June, tech-sector job cuts totaled 14,308. Job cuts jumped 59 percent to 22,730 between July and December. That was up 99 percent from the 11,450 tech-sector job cuts announced during the same period in 2010. Most of the second-half surge in the technology sector came from firms in the computer industry. After announcing just 3,178 job cuts in the first half of 2011, computer firms announced planned layoffs totaling 11,499 in the second half of the year; a 262 percent increase.
“The second-half surge notwithstanding, the technology sector is definitely among the areas of the economy enjoying the fruits of recovery. The 22,730 announced by these employers over the last six months is still relatively low, compared to recent years,” said John Challenger, CEO of Challenger, Gray & Christmas. “Several trends in the sector, including the advancement of cloud storage and the push to develop more portable computing devices, such as tabs and smartphones, is helping to create and protect jobs in the sector.”
According to the latest data from the Bureau of Labor Statistics, payrolls at computer and electronics manufacturing firms saw a net gain of 13,100 jobs in 2011, bringing total employment to 1,124,000. Meanwhile, employment at companies providing computer systems design and related services increased by 60,200 to 1,525,100. Not every area in the technology sector saw employment increase. For example, payrolls at firms categorized by the Bureau Labor Statistics as data processing, hosting and related services shrank by 2,100 to 238,900.
“The technology sector is in a constant state of flux. This is not secret to professionals in the industry who have, over the years, seen many jobs move overseas,” Challenger said. “Those left behind who neglected to update their skills to keep up with the rapidly changing demands of the industry are undoubtedly struggling to find employment even as the sector continues to experience a strong recovery.”
Technology jobs should continue to grow in 2012, but possibly at a slower rate, based on IT spending forecasts recently released by research firm Gartner. It estimates that spending on information technology will rise only 3.7 percent. That was down from an earlier forecast of 4.6 percent.
“The slowdown in spending could delay job creation. However, even if job growth declines slightly in 2012, technology will still be among the strongest job markets,” Challenger said. “Technology has become so widespread that job seekers no longer have to concentrate their searches on the coasts. Houston, for example, led the nation in technology job growth between 2010 and 2011. According to the Nashville Technology Council, the Middle Tennessee region that includes Nashville had more than 1,000 tech-related job openings in the fourth quarter.”