MoneyWatch Tech

Tech Layoffs on Big Q1 Upswing, Far Outpacing Average

By Erik Sherman

Updated on: March 25, 2009 / 9:19 AM EDT / MoneyWatch

When outsourcing consultancy Challenger, Gray & Christmas released its figures on job cuts in January and February, the numbers were depressing, with the two months figure almost double the same period in 2008 and close to the number of job cuts in the first six months of last year. But the picture is much worse for high tech, with layoffs in January and February almost quadruple those in the full first quarter of 2008 and far in excess of the portion of the economy that the sector represents.

As I've mentioned before, according to numbers from Challenger, tech layoffs in 2008 were hardly a high water mark. From 2001 through 2008, last year was only the fifth highest number of job losses in the industry. But the numbers are rapidly starting to look progressively worse. The table below, put together for us by Challenger for an apples-to-apples comparison, shows the layoff patterns in electronics, computers, and telecom:

	Q1	Q2	Q3	Q4	Sector Total
Electronics	5,928	4,073	6,884	25,177	42,062
Computer	4,840	10,429	28,733	20,858	64,860
Telecom	6,577	19,142	2,652	20,277	48,648
Q Total	17,345	36,644	38,269	66,312	155,570

The job outlook has been deteriorating even faster this year. For January and February alone in 2009, the company has tracked 67,127 technology job losses. That is behind only retail with 72,272 job cuts and automotive, with 70,058.

Even without March in place, the quarterly job losses are already at 387 percent of last year's first quarter, or double the average. As the total number of job cuts for January and February was 428,009, high tech represented 15.7 percent of all downsizing.

I checked data from the federal government to see how many people were employed in high tech at the end of 2007. There isn't such a single category, so I added numbers from the following individual ones:

Sector	2007 Figure (thousands)
Computer and electronic products	1,273
Electrical equipment, appliances, and components	430
Broadcasting and telecommunications	1,371
Information and data processing services	331
Computer systems design and related services	1,369

The total was 4,764,000. If all the job cuts on the Challenger report were in the U.S. (not entirely fair as some are international, but you look at the data you can get), they would represent about 4.7 percent of sector employment at the end of 2007. It's also interesting to examine federal data on how big a part of the economy this industry is.

Sector	% of 2007 US GDP
Computer and electronic products	1.1
Electrical equipment, appliances, and components	0.4
Broadcasting and telecommunications	2.5
Information and data processing services	0.4
Computer systems design and related services	1.2

That comes to 5.6 percent of GDP at the end of 2007. Again, the data isn't a completely clean match, but you could argue that layoffs in high tech as a percentage of all layoffs are running almost triple the size of the industry compared to the nation's economy. That would suggest one of three conclusions:

High tech companies are over-reacting.
The industry is being hit particularly hard by the slowdown.
Tech companies had over-hired and are using the recession as an excuse to purge.

So, on one hand, if things seem unduly bad on the high tech job front, they are. On the other hand, they could be a lot worse. Unfortunately, it seems as though there's a good chance that they will be.

[UPDATE: Check the full Q1 picture with March's numbers. There's a little news for encouragement, but things remain largely grim.]

Axe image via Stock.xchng user Marzie, standard site license.

Erik Sherman

Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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