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Study: IT job cuts up sharply in Q3

Corporate restructurings reduce the number of workers, according to Challenger

By Todd R. Weiss
October 16, 2006 12:00 PM ET

Computerworld - Just three months after U.S. IT job cuts reached their lowest levels since 2000, a new study has found that planned workforce cuts are again heading upward as recent corporate restructuring, mergers and other events are reducing the number of available jobs.

The study, released today by Chicago-based global outplacement consultancy Challenger, Gray & Christmas Inc., found that planned IT job cuts increased 74% in the third quarter to 50,957, up from 29,226 this past June 30, when the number of IT job cuts had dropped to its lowest level since the third quarter of 2000.

The seven-page study, "Tech Spending Slowdown on the Horizon?" concludes that the third-quarter job cuts are attributable mostly to cost-cutting and restructuring, which accounted for 33,373, or 65%, of the cuts in the quarter that ended Sept. 30. Overall for the year, corporate mergers have been cited for 29% of the tech job cuts through September, according to the study. Also affecting job cut levels are business competition, reduced sales and product demand, company closings and outsourcing.

"These numbers are a clear indication that tech companies see a slowdown on the horizon," said John A. Challenger, CEO of Challenger, Gray & Christmas, in a statement. "The economy seems relatively stable now but corporate leaders have been less than optimistic about the outlook for 2007. For technology companies, this translates into lower business-to-business and consumer sales."

The Challenger study found that third-quarter job cuts by employers in the telecommunications, electronics, computer and e-commerce industries were 23% higher than the 41,439 cuts announced a year ago.

Most of the third-quarter job cuts occurred in the computer sector, the study said, with 30,511 cuts. That's more than the 30,342 announced in the first six months of this year.

Even with the higher job-cut figures in the third quarter, the total of 119,562 IT job cuts for the year so far remains 15% below the 140,696 cuts for the same period in 2005, according to the study.

Other related data from Challenger shows that technology companies have announced plans to hire just 5,764 new workers in the third quarter, down from 14,090 in the second quarter, according to the study.

The national Challenger study is compiled based on news reports of job actions, company press releases about upcoming employment actions and state notifications of layoffs that employers file with state governments, according to Challenger.

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