Layoffs on the rise

Emily Chasan

NEW YORK: The trouble may not be over for the long-distressed high technology sector, as statements and reports on September job cuts indicate a surge in layoffs.

Whether this is the tipping point for a long-troubled sector, or a blip in the path toward steady growth remains to be seen, analysts said.

In the month of September alone, layoffs in the computer and telecommunications industries reached a six-month high, according to a monthly report by employment services firm Challenger, Gray & Christmas Inc., squelching hopes job cuts were slowing in these industries.

The computer industry lost 24,300 jobs in September, compared with 5,004 in August, while the long-troubled telecommunications sector lost 10,982, compared with 5,617 in August, the report said.

Both industries, which have had higher than average job cuts since the dot-com bubble burst in 2001, were thought to be hitting a turnaround in overall job loss, since the last six months had relatively stable figures. But the surge in announcements this month, combined with a tough pricing market and soft demand that companies said in their statements may mean more job losses in the future.

"It's a sign that there is some consolidation going on, there are companies that haven't met their numbers and perhaps that demand is sluggish," said Challenger Gray chief executive John Challenger.






He said the surge in layoffs this month was surprising given that, "generally, tech has had a pretty good run this year," he said.

Earlier this month computer services company Electronic Data Systems Corp. said it could cut up to 20,000 jobs over the next two years and other companies like communications chip maker Agere Systems Inc. and software maker Computer Associates International Inc. said they would cut 500 and 800 jobs, respectively. Both Agere and Computer Associates booked millions in charges for the layoffs, but said they were under pressure to lower costs in statements.

In the telecommunications sector, offshore outsourcing has been a significant worry for job holders, as call centers open every month and more and more layoffs are announced.

In Georgia, CWA Local 3250 President Roy Hegenbart, whose union represents AT&T Corp. workers said he has seen the rate that jobs are cut double in recent months.

"We used to have, just in this area, over 1600 people, we're down to about 600 now," he said, blaming outsourcing and soft demand for local and long distance services.

Motorola Inc., also announced in September that it would cut 1,000 jobs, or almost 1 percent of its work force, saying the company was facing an increasingly competitive market.

Job opportunities in high tech may also be shrinking, according to the Challenger Gray report. In September, both the computer and telecommunications industry announced zero new jobs.

Challenger said this month's report would make him take another look at the sector.

"There can always be some slowdown," he said. "I think it's certainly something that's worth watching, whether or not tech spending is slowing."