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January Tech Job Cut Announcements Take a Rebound

Last month I happily wrote that, should the downward trend of job cuts continue, I'd stop doing this monthly post. As you have already guessed, it didn't. Outplacement firm Challenger, Gray & Christmas announced U.S. job cuts for last month, stating that they were the highest in five months, with retail and telecommunications being the big drivers. Here's a summary since January 2009:
Sector January 09 February 09 March 09 April 09 May 09 June 09
Electronics 11,050 11,065 11,500 6,608 1,423 4,103
Computer 22,330 3,960 5,290 1,702 15,384 2,795
Telecom 13,056 5,666 250 262 812 802
Total 20,628 2,386 1,794 18,197 12,708 808 17,204
Sector July 09 August 09 September 09 October 09 November 09 December 09 January 10
Electronics 1,343 1,562 683 10,882 4,792 239 559
Computer 1,684 75 494 7,089 4,106 352 2,635
Telecom 17,601 749 617 226 3,810 217 14,010
Total 20,628 2,386 1,794 18,197 12,708 808 17,204
Here a graph of the monthly results for the year with a trend line for the industry totals:

Retail you can understand, as the holiday shopping season comes to an end and the sales hangover sets in. Telecom didn't need many companies to boost the layoff announcements. Verizon (VZ) said that it would fire (because that's what it really comes down to) an additional 13,000 employees, even as the company had strong wireless growth and yet had a net loss for last quarter, largely because of the $3 billion it was taking from the 8,000 employees it had already sent packing. The problem is the landline business, which is not only waning, but which Verizon has seemed anxious to leave. In each of the last two years it dropped 13,000 employees from the landline business. Notice a pattern here?

It's tempting to say, "Oh, but that's a one-time thing." Unfortunately, it's almost always supposed to be a one time thing. But when you have large companies taking turns cutting jobs to preserve earnings, there's always another one-time thing to batter the industry a bit more. The level of industry layoffs is certainly down from this time last year, but I wouldn't make bets on this being the end. We have a number of factors:

  • Hardware keeps getting cheaper, cutting out margin.
  • Other industries are still hurting and IT budgets are under tight reins.
  • Consumer spending is also tight.
  • Increasingly, there are ways for people and businesses to find free or low-cost alternatives to services that once brought in revenue to companies.
These are long-term patterns, and although I'd like to think that the blood-letting has ended, the chance of that is nix.

Executioner image via stock.xchng user sateda, standard site license.