Job cuts decimating telecom sector

More than one of every five jobs lost in the U.S. in the past six months came from the telecommunications sector, according to a new study released today by Challenger, Gray and Christmas Inc.

Since January, the Chicago-based placement firm has tracked 735,527 layoffs nationwide, and 22 per cent of those, or 165,840, came from companies in the telecommunications sector.

“At no other time since [Challenger] began tracking job cuts in 1993 has one industry accounted for such a significant per centage of overall job cuts,” the firm said in an e-mail statement.

Challenger CEO John A. Challenger has repeatedly said that the telecommunications industry, which has already had a bad year, hasn’t seen the end of its troubles. In an interview with Computerworld last spring, Challenger said the industry still had heavy bureaucracies that would probably be felled by layoffs as it struggled with profitability and new technologies.

“The fact that telecom downsizing is on track to beat last year’s total really tells where this industry is headed,” Challenger said today. “Not only are companies having trouble selling their goods and services; there is now the added element of questionable accounting, WorldCom being just the most recent example.

“This path of self-destruction will not help matters, and we could eventually see the industry implode on itself,” he said.

Overall, IT-related job cuts totaled 243,191, accounting for 33 per cent of layoffs nationwide. Those figures broke down to 55,398 jobs lost in the computer manufacturing sector, 20,221 electronics jobs cut and the elimination of 1,741 e-commerce-related jobs.

The Challenger study said the number of job cuts in computer manufacturing could increase in the last half of this year because new government data shows that consumer spending is down.

There was a bright spot in the figures, however. Overall job losses in tech sectors were down for the first six months of 2002 when compared to the same time frame in 2001. Last year, 313,939 job cuts had already been recorded halfway through the year.

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Jim Love, Chief Content Officer, IT World Canada

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