Tech Sector Saw Nearly 175,000 Jobs Cut in 2009

Job cuts in technology were fierce in 2009, but 2010 is expected to see modest growth in a number of subsectors. The last time layoffs were this bad was in 2005, according to a report from Challenger, Gray & Christmas.

Job cuts in technology were fierce in 2009. Last year saw 174,629 jobs lost in the sector, catapulting up 12.3 percent from the 2008 cuts of 155,570 jobs, according to outplacement company Challenger, Gray & Christmas, which tracks industry numbers on announced layoffs. Technology-still considered by the Department of Labor to be one of the most promising industries for future job creation-has not seen that many layoffs since 2005.

"The worst of the downsizing occurred in the first quarter, which is when the overall economy hit rock bottom," CEO John A. Challenger said in a statement. "The recession's impact on the tech sector was inescapable."

The technology-focused blog TechCrunch developed its own "layoff tracker" Web application, which has been documenting layoffs in the sector since October 2008. For comparison, as of its last update in November 2009, TechCrunch had reported a total of 350,299 employees laid off-roughly 20,000 more than Challenger, Gray & Christmas' numbers for the two-year period, but certainly in the same ballpark.
The tech sector accounted for about 13.2 percent of the total 1.3 million announced job cuts in the United States in 2009, said Challenger, Gray & Christmas. By subsector, electronics fared the worst with 65,000 jobs cut-up 55 percent from 2008-while telecommunications lost 9.4 percent fewer jobs in 2009. The computer industry was unchanged, said the report.
"It's going to be a slow climb out of this recession, but computer and electronics firms should be among the first to see the turnaround, as companies try to postpone hiring by achieving productivity gains through technology," Challenger said. "Even with the economy showing some nascent signs of recovery beginning the second half of the year, many companies are holding off on investments in new technology. And, with it still [being] difficult for small businesses and startups to obtain loans, there are few opportunities for tech firms to expand their customer base."
Technology spending is expected to grow between 3.2 and 6.6 percent in 2010, according to all the major technology analyst companies (IDC, Forrester and Gartner). With an expected increase in electronic health record conversion in the health care industry and upgrades to the federal government's systems, Challenger, Gray & Christmas expects to see some growth in technology jobs in 2010.
"Despite the potential for improved hiring in the new year, there are a lot people competing for every opening and many employers are very particular about what skills and experience they want new workers to have," Challenger said. "It is critical that technology workers continually update their skills in order to remain competitive. It is necessary to maintain a balance between having specialized skills and having the flexibility of a generalist. It may also be necessary to expand one's search to more industries or geographically."
Technology skills in demand in 2010 include application developers and software engineers, particularly in mobile applications and cloud computing, according to "IT Predictions: Recovery and Transformation," a report by IDC Chief Analyst Frank Gens.
"We'll see a radically transforming marketplace-driven by surging demand in emerging markets, growing impact from the cloud services model, an explosion of mobile devices and applications, and the continuing rollout of higher-speed networks," Gens said in the December report. "These transformational forces will drive key players to redefine themselves and their offerings and will spark lots of M&A activity."