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For some high-tech workers, it is certainly the worst of times. Companies that have recently cut jobs include 3Com, Cisco Systems, Dell Computer, Exodus Communications, Intel — the list goes on and on. Last month alone, Internet, computer and telecommunications companies laid off more than 57,000 people, according to outplacement firm Challenger, Gray & Christmas. Matrix Editor Todd Spangler spoke about the state of the job market with Kevin McNerney, managing partner of the global technology practice at Heidrick & Struggles International, one of the worlds largest recruiting firms.
Are there any bright spots amid these cutbacks?
Well, Id say a couple of things. When you see somebody like Cisco doing big layoffs, clearly theres an opportunity for those companies to revamp their strategies. Its not just cutting people.
Look at this from a macro point of view. Think of an old, tired industry, like steel. There are still parts that are thriving, but overall as it changed the people in that industry needed to be redeployed and retrained. It might be odd to think about it this way, but the same thing is happening in IT [information technology]. Software development 15 years ago was very different from how it is being done today. I look at it as more of a redirecting of resources. Ive unfortunately had to assist a company going through layoffs. Its damned hard. But its usually done in the context of a broader look at the strategic focus of the company.
What technology sectors have been the hardest hit?
First, the telecom side has been through huge, tumultuous times for quite some time. And its not just centered on the major carriers. It includes whats happening in the CLEC [competitive local exchange carrier] market. Thats been a difficult industry from a lot of measures. On the other hand, what were finding is that theres a good amount of strategizing on the part of the companies who believe theyre going to be the players going forward. So theyre taking this time to buff up their management teams.
Weve also seen that the IT services sector has been slow, and youve seen a real slowdown in the dot-com and e-commerce markets. The software industry has been moving along pretty well. On the software side, were finding there are a lot of new ideas and new companies. The problem is there isnt any money to start the companies. The same people who funded this mess are gun-shy now.
How should companies approach decisions about staff reductions?
Some companies are going to look at [layoffs] as a way to prune their cost base down. Others will look at this as a way to redirect resources. When youre going great guns in a strong economy, a lot of creativity comes out of that. In a downturn, money tightens up and you want to stick to your knitting. You want to spend less time, energy and money on new ideas. Companies say, “Well accept ideas that are one concentric circle off what we do, but not if its three concentric circles off.”