Q4 Tech Job Cuts Fall To Record Low; 2006 Cuts Lowest Since 2000: Challenger

U.S. Tech-sector job cuts plummeted 77% in the fourth quarter of 2006 to 11,619, according to the latest survey by Challenger, Gray & Christmas, Inc.  The record low fourth-quarter brought the tech-sector job cut total to 131,181 in 2006, the lowest since the 100,901 job cuts in 2000. 

Fourth quarter total was the lowest since Challenger initiated its quarterly tech-cuts survey in 1999 to track planned job-cut announcements by firms in the computer, electronics, e-commerce and telecommunications industries.

  • 2006 year-end total was 25% lower than the 174,744 technology job cuts in 2005.  Technology job cuts accounted for 16% of the 839,822 cuts announced by all industries in 2006.          
  • The fourth-quarter plunge can be attributed to a significant decline in computer industry cuts, which fell 89% from 30,511 in the third quarter to 3,268 in the fourth.  
  • Job cuts in the telecom industry also saw a dramatic decline, falling 80% from 13,523 to 2,670.  
  • For the first time since tracking began, e-commerce firms registered zero job cuts, demonstrating the extent of the sector’s renaissance since its 2000-2001 collapse.
  • Merger/acquisition activity and restructuring were the leading causes for 2006 tech-sector job cuts, resulting in 35,645 and 35,626 job cuts, respectively.  
  • Cost-cutting was the other major job-cut catalyst, accounting for 29,113 or 22 percent of tech cuts.            

2006 TECHNOLOGY JOB CUTS

Telecom

Computer

Electronics

E-Commerce

QUARTER TOTAL

Quarter 1

23,791

10,711

4,738

139

39,379

Quarter 2

5,963

19,631

2,238

1,394

29,226

Quarter 3

13,523

30,511

1,865

5,058

50,957

Quarter 4

2,670

3,268

5,681

0

11,619

SECTOR TOTAL

45,947

64,121

14,522

6,591

131,181

Source: Challenger, Gray & Christmas, Inc.

 

TECHNOLOGY SECTOR JOB CUTS
(Telecom, Computer, Electronics, E-Commerce)

Year

Q1

Q2

Q3

Q4

TOTAL 

% of All Job Cuts

2006

39,379

29,226 50,957 11,619

131,181

16% of (839,822)
2005

59,537

39,720 41,439 34,048

174,744

16.3% of  (1,072,054)

2004

29,513

34,213

54,701

57,686

176,113

17% of  (1,039,735)

2003

61,032

36,967

47,998

82,328

228,325

19% of  (1,236,426)

2002

110,247

132,953

91,450

133,511

468,161

32% of  (1,466,823)

2001

161,520

151,869

213,420

168,772

695,581

36% of  (1,956,876)

2000

17,823

14,051

26,583

42,444

100,901

16% of  (613,960)

1999

17,248

29,841

39,097

13,596

99,782

15% of  (675,132)

Source: Challenger, Gray & Christmas, Inc.

Evidence of a strong 2007 can be seen in a survey by technology trade publication Computerworld, which found 41% of respondents expect IT budgets to increase in 2007: 

  • 33% predicted that payrolls will increase in 2007
  • 59% believed staffing levels would remain unchanged.  
  • 8% foresee a reduction in workers.

According to the Computerworld survey, the job categories that will have the highest demand are programming/application development, project management, IT/business analysis, security, and help desk/technical support.

“One area that could see increased job cuts in 2007 is telecommunication.  Some experts expect revenue to shrink as these firms expand their offerings into cable television, mobile broadband and Internet services.  These expanded services initially will result in job creation.  However, if these new ventures fail, we could see a surge of job cuts,” said Challenger.

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