2004 Tech Job Cuts Drop 23%

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The picture improved for embattled technology workers in 2004 as downsizing in the sector slowed by 23%. However, a year-end surge in mergers, which contributed to a 101% fourth quarter increase in telecommunications job cuts, is expected to continue in 2005 and increase tech workers’ job vulnerability.

The fourth quarter was the largest of the year for tech-sector job cuts, according to the report released Wednesday by global outplacement firm Challenger, Gray & Christmas.

“News of a continued decline in tech sector downsizing will undoubtedly be well received by workers in these industries who have witnessed more than 1.5 million job cuts since 2001,” said John Challenger, CEO of Challenger. “Unfortunately, falling job cuts may give a false impression. It does not necessarily indicate that job security is improving. The fact is the technology sector is very volatile.”

The tech sector, which includes firms in telecommunications, computers, electronics and e-commerce, announced 57,686 job cuts in the last quarter of 2004, a 5.5% increase from the third quarter (54,701).

Overall, tech-sector employers announced 176,113 job cuts in 2004, 64% of which occurred in the last six months. Despite the year-end increase, the annual total was 23% lower than the 228,325 tech cuts announced in 2003 and 62% lower than the 2002 total of 468,161.

In 2004, technology represented 17% of the 1,039,735 job cuts announced by all sectors. That marks a decline from 2003 when tech cuts accounted for 18.5% of the 1,236,426 cuts announced during the year.

In 2002, one in three job cuts were in the technology sector.

The heaviest technology sector downsizing in 2004 occurred among telecommunications firms, which announced 98,734 cuts, or 56% of the tech-sector total.

Telecommunications job cuts surged in the fourth quarter, increasing 101% from 19,825 in the third quarter to 39,860 in the fourth quarter.

The second leading technology job cutter in 2004 was the computer industry, which announced 56,955 job cuts, 8.6% fewer than the 62,289 cuts employers in this field announced in 2003.