When the economy started to crumble for the housing, automotive and banking industries last year, there's was some optimism that Silicon Valley and the tech industry might be able to withstand the storm.
Clearly, that was a short-lived dream.
A report released today by consulting firm Challenger, Gray & Christmas found that tech took a beating in 2008 (mostly in the second half), slashing nearly 187,000 jobs in the telecommunications, computer and electronic sectors, an increase of more than 74 percent compared to the previous year.
How bad is it? CNET's Dawn Kawamoto notes that the unemployment rate in Santa Clara County, California - the region commonly known as Silicon Valley and one of the most expensive areas to live, outside of Manhattan - has an unemployment rate that has passed the national figure. She writes:
Within the various sectors in tech, electronics firms saw losses of 73,447 jobs, an increase of 89.7 percent over the previous year; the telecommunications industry saw an increase of 72.5 percent; and cuts in the computer industry were up 61.3 percent. And in the Silicon Valley, for just the month of December, the unemployment rate rose to 7.7 percent in Santa Clara County and 5.9 percent in San Mateo County. Nationwide, the unemployment rate reached 7.2 percent for the month of December.
The tech industry hasn't seen unemployment levels like this since 2003, the report noted. And it seems, based on just the first month of the new year, that 2009 won't look much better. John Challenger, CEO of Challenger, Gray & Christmas, said in statement
Through the first half of 2008, it looked as though the tech sector might be one of the few areas of the economy to remain resistant to recessionary pressures. However, the economy's continued slide here and overseas saw consumer and corporate demand for technology products and services drop rapidly,and these firms were suddenly under pressure to make significant cost-cutting moves... Cuts could reach even higher in 2009, as there is no evidence yet that the economy has hit the bottom of this downward portion of the cycle. We almost certainly will not see a repeat of the 2008 first quarter, in which tech cuts totaled just 17,345.
In January alone (and there's still one more day left of the business month), we're seen layoff headlines from:
- Microsoft (5,000)
- Motorola (4,000)
- SAP (3,000)
- Seagate (2,950)
- Lenovo (2,500)
- EMC (2,400)
- Texas Instruments (1,800 + 1,600 in retirement and voluntary departures)
- AMD (1,100)
- Autodesk (750)
- AOL (700)
In all (and I know I've probably forgotten a couple), that makes just shy of 25,000 tech jobs announced in January alone. That doesn't even count previously announced layoffs that will come down the pipeline this year, including Dell (8,800), Sun Microsystems (6,000) and Motorola (3,000).