Job Cuts in the Tech Sector Grow at a Faster Pace

Reflecting the volatile and changing face of the tech sector, employers in the industry have cut jobs at a faster pace during the first six months of this year than in the same six-month period in 2013. The increase in announced job cuts grew 68 percent year to year, rising from 28,883 mid-year 2013 to 48,402 mid-year 2014, according to a report released by Challenger, Gray & Christmas, a global outplacement consultancy firm.

However, layoffs at big-ticket companies like Microsoft, Intel and Hewlett-Packard (HP)—which all have announced cuts in 2014—may indicate that some parts of the sector are transitioning toward a more streamlined model of business and attempting to better position themselves for future changes.

Such is the case with H-P, which announced close to 16,000 layoffs in May. The company is attempting to keep pace with consumers who want smart phones and tablets instead of PCs and printers, according to Challenger, Gray & Christmas.

“There’s no question that the economy, from a jobs standpoint, is in a good position right now,” says CEO John Challenger. “Jobs have been constantly created for some time. Tech is doing well. It’s just that it’s a volatile space and operates on its own clock. It’s not tethered, or only tethered, to the economy’s ups and downs because of the speed with which new technologies can come in and supplant what was there before.”

However, with Microsoft’s mid-July announcement of 18,000 planned job cuts (14 percent of the workforce, with many cuts expected to occur in the Nokia division), the tech industry could be on its way toward surpassing the number of layoffs in tech for all of 2013: 56,918, according to Challenger, Gray & Christmas. Job cuts reached 174,629 in 2009 and 695,581 in 2001—the highest ever number of technology job cuts.

However, worried employees in the tech sector can be reassured by the fact that in June 2014, the economy had the lowest unemployment rate it has experienced since September 2008, that of 6.1 percent. Plus, as Challenger points outs, employees who lack technology skills are being laid off in greater numbers than those who are tech professionals.

“Many of the jobs that are being lost at some of these bigger tech companies are not tech jobs,” Challenger says. “When a company like Hewlett-Packard cuts jobs, it could be in human resources and purchasing or in sales and marketing.”

In fact, he says the current job market is strong for tech professionals, particularly programmers. He adds that tech employees with outdated or weak skills could benefit by bringing their skills up to date.

“The demand for people with technical skills is really quite high,” Challenger says. “And if they do lose their job, they will be entering a receptive job market.”