Tech job cuts fall to three-year low in Q1: Challenger

Planned workforce reductions in the technology sector in the U.S. plummeted to 29,513 in the first quarter of this year, the lowest level in more than three years, according to Chicago-based outplacement firm Challenger, Gray & Christmas Inc.

First-quarter job cuts in the high-tech sector, which includes telecommunications, electronics, computer and e-commerce, were 64 per cent lower than the 82,328 cuts posted in the previous quarter and 52 per cent lower than the 61,032 cuts announced in the first quarter of 2003, the firm said.

The first-quarter figure is the lowest since January 2001, when Challenger began issuing its high-tech job-cut reports.

Technology cuts represented 11.2 per cent of the 262,840 job cuts announced in all industries during the first quarter, down from 17 per cent in the first quarter of 2003. In contrast, technology accounted for 32 per cent of all cuts in 2002 and 36 per cent of all cuts in 2001, according to Challenger.

In the first quarter, telecommunications companies led all others in job cuts, just as it has in 11 of the previous 12 quarters.

Telecom companies announced 20,681 job cuts between January and March, more than four times the 4,828 cuts announced by the second-ranked computer industry, Challenger said. Electronics companies announced 3,401 cuts in the first quarter, while e-commerce firms posted 603 cuts.

“This may not mean that telecom is the weakest of the technology industries, but it is clearly the most volatile. While some areas in this industry are consolidating, others are expanding,” said John Challenger, CEO of the Chicago-based firm.

“Overall, technology job cuts appear to be waning, a trend which may temper some of the increasingly heated debate over the controversial practice of offshore outsourcing,” Challenger said. “However, while the latest survey data show that offshore outsourcing is not leading to a surge in job-cut announcements, one can still argue that it is slowing job creation in technology.”

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