Staff count shrinks at IT firms

Job cuts announced by computer firms rose a staggering 179 percent in the second quarter of this year, according to outplacement...

Job cuts announced by computer firms soared by 179% in the second quarter of this year, according to outplacement firm Challenger, Gray & Christmas.

Challenger said that the surge in lay-offs - to 13,465 from 4,828 in the previous quarter - was a reminder that the job market remained volatile and that significant job losses in technology-related industries could occur even as new positions were created.

In its quarterly report on employment trends in the technology sector, Challenger said job cuts in the IT, electronics, telecoms and e-commerce industries rose by 16% in the second quarter (from 29,513 to 34,213).

The job cuts announced by computer firms were the sole reason for the 16% increase. Job cuts announced in the other three industries actually fell during the second quarter.

Job cuts dropped by 12% (from 20,681 to 18,368) in telecoms and by 31% (from 3,401 to 2,338) in electronics. In e-commerce job cuts fell from 603 to 42.

The technology sector accounted for 13.5% (or 63,726 posts) of the 472,735 job cuts announced in all industries during the first six months of this year. That is a third less than the 97,999 tech-related job cuts announced in the first half of 2003.

"After a massive upgrade of computer equipment and software in preparation for the Y2K crisis, companies were able to go for an extended period without major system enhancements," said Challenger chief executive officer John A Challenger. 

"Now that the economy is gaining strength, companies are beginning to invest in new technology, which is helping firms in the computer, electronics and telecom industries."

However, he also said that technology companies would probably experience growing pains as they worked out where demand would be highest and made staffing adjustments. "That may be what we saw in the computer job cuts spike between April and June," he said.

Linda Rosencrance writes for Computerworld

Read more on IT jobs and recruitment