Tech job cuts at lowest level since 1997: report

Tech layoffs jumped again in the second half of 2011, but not enough to offset a very good year for the industry, according to latest Challenger findings.
Written by Joe McKendrick, Contributing Writer

After a brutal period of downsizings and IT budget retrenchments, it appears companies are getting anxious to hang to their IT technologists and technicians.

Challenger, Gray & Christmas, which tracks layoffs and downsizings on a monthly basis, reports that the number of tech job cuts announced by US employers in 2011 plunged to the lowest level ever recorded in tracking going back to 1997.

Any one in the industry at that time remembers what 1997 was like. Companies were scrambling for people who could help them either participate in the dot-com boom or remediate their systems for Y2K. Oh, and do the regular programming, storage management and maintenance in there as well.

Challenger measured layoff trends at technology firms, including those in the computer, electronics and telecommunications industries. A total of 37,038 planned job cuts were announced in 2011, down 21% from 46,825 in 2010. The year-end total was down 79% from the recent peak of 174,629 recorded in 2009, when the recession was at its worst.

Actually, Challenger found that the decline in technology job cuts occurred as overall job cuts increased. The number of job cuts announced across all industries rose 14% from 529,973 in 2010 to 606,082 in 2011. The technology sector accounted for 6.1% of the 2011 total. That is the lowest percentage of tech-sector cuts on record, falling from last year’s record low of 8.8%.

However, Challenger adds, technology job cuts did surge in the second half of 2011, raising concerns about whether the upward trend will continue into 2012. From January through June, tech-sector job cuts totaled 14,308. Job cuts jumped 59% to 22,730 between July and December. That was up 99% from the 11,450 tech-sector job cuts announced during the same period in 2010.

Most of the second-half surge in the technology sector came from firms in the computer industry. After announcing just 3,178 job cuts in the first half of 2011, computer firms announced planned layoffs totaling 11,499 in the second half of the year; a 262%.

“Several trends in the sector, including the advancement of cloud storage and the push to develop more portable computing devices, such as tabs and smartphones, is helping to create and protect jobs in the sector,” said John Challenger, CEO of the outplacement firm.

According to the latest data from the US Bureau of Labor Statistics, payrolls at of computer and electronics manufacturing firms saw a net gain of 13,100 jobs in 2011, bringing total employment to 1,124,000. Meanwhile, employment at companies providing computer systems design and related services increased by 60,200 to 1,525,100.

Not every area in the technology sector saw employment increase. For example, payrolls at firms categorized by the Bureau Labor Statistics as data processing, hosting and related services shrank by 2,100 to 238,900.

Technology jobs should continue to grow in 2012, but possibly at a slower rate, based on IT spending forecasts recently released by research firm Gartner. It estimates that spending on information technology will rise only 3.7%, but this is down from an earlier forecast of 4.6%.

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