Tech Sector Job Cuts Plunge 60%


In past years, the 6,500 job cuts announced this week by Cisco Systems probably would not have stood out, particularly in a sector that at one time commonly saw job-cut events numbering in the tens of thousands. This year, however, the Cisco announcement stands out as the largest job cut of the year in a sector that is experiencing record low downsizing.

Technology firms announced just 14,308 job cuts in the first half of 2011, a 60 percent drop from the 35,375 cuts announced during the same period a year ago, according to a special report on technology-sector job cuts released Wednesday by global outplacement firm Challenger, Gray & Christmas, Inc.

While first-half job cuts announced by telecommunications, electronics and computer firms were up slightly from 11,450 job cuts announced in the final six months of 2010, the increase probably does not signal a resurgence in tech-sector downsizing.

“The Cisco cuts notwithstanding, the overall health of the technology sector remains very strong. In fact, it is one of the best performing industries in the economy at the moment. It is highly unlikely that planned layoffs in the second half of the year will be heavy enough for the year-end total to surpass last year’s record low 46,825 job cuts,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

The 14,308 tech-sector job cuts announced so far this year represent just 5.8 percent of the 245,806 job cuts announced across all industries. In contrast to the 60-percent decline in tech-sector job cuts, the overall job-cut total for the first half of 2011 is down only 17 percent from last year’s six-month total.

The biggest decline in tech-sector job cuts was experienced by computer firms, which saw the number of planned layoffs plunge 81 percent, from 16,964 in the first half of 2010 to 3,178 this year. The only other industry to see a bigger drop in layoffs this year is pharmaceutical, where job cuts declined 86 percent from 34,987 to 4,771.

Job cuts announced by telecommunications firms dropped 57 percent from 16,005 in 2010 to 6,813 this year. Firms in the electronics industry were the only segment of the tech sector to see an increase in job cuts. Layoffs among these employers increased 79 percent from 2,406 a year ago to a 2011 six-month total of 4,317, which is still very low by historical standards.

Prior to the Cisco workforce reductions, which will be counted in Challenger’s third-quarter tally of tech-sector job cuts, the largest reported layoff this year came from telecommunications firm Qwest Communications, which announced 1,800 planned job cuts in March.

“As many sectors outside of government continue to see relatively low downsizing activity, the tech sector is one of the few areas actually adding workers. Through June, companies in the sector announced plans to add nearly 26,000 workers, which represents just a small portion of actual hiring, since most employers do not formally announcing hiring plans,” noted Challenger.

According to payroll figures from the Bureau of Labor Statistics, employment within computer systems design and related services has grown by 42,000 since the beginning of 2011. Computer and electronics manufacturers have added more than 12,000 workers to their payrolls.

Meanwhile, according to a survey by IT job site, the hiring should continue into the second half of 2011. The site’s June survey of nearly 900 hiring managers and recruiters, found that 65 percent anticipate hiring more technology professionals in the second half of 2011 than the preceding six months.

An article appearing last June in information technology industry publication, InfoWorld, identified some of the IT jobs with the best growth potential. Making the list were business architect, data scientist, social media architect, mobile technology expert, enterprise mobile developer and cloud architect.

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Get the full report: Historical Data



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