Layoffs Continue to Torment Dot-com Sector

The dot-com sector took another hit last month, registering the second month in a row of more than 1,000 layoffs.

Dot-com firms in August cut 1,193 jobs. That’s just 557 fewer layoffs than the 1,750 job cuts the sector suffered in July. The layoff cycle has been on a roller coaster ride all year, according to John Challenger, CEO of the Chicago-based outplacement firm, Challenger, Gray & Christmas, which has been tracking layoffs in the high-tech industry. August was a little surprising in that the numbers didn’t drop as much as expected — or hoped for.

”It’s too early to tell if the two consecutive 1,000-plus months are the beginning of higher dot-com job cuts,” says Challenger. ”There’s certainly the potential as companies that survived the dot-com collapse are now struggling to survive the overall downturn in the economy.”

The industry has been suffering for more than a year now. But despite the poor numbers logged in July and August, they’re still better than those logged the year before.

The August figure was 76% lower than the 4,899 dot-com job-cut announcements in the same month a year ago. Dot-coms have announced 10,550 layoffs in 2002, which is well below the 2001 level. Through August, 2001, job cuts in this sector totaled 87,795. By the end of 2001, job cuts reached 100,925. This year dot-com job cuts are on pace to stay below 16,000.

The majority of the August dot-com job cuts were announced by companies offering consumer and business services, as well as firms specializing in Internet-related technology. Together, services and technology firms announced 1,160 job cuts or 97% of the month’s total.

”It’s reflective of what’s going on in the economy,” Challenger adds. ”One day it sounds optimistic. The next day there’s pessimism. The dot-com layoffs have been mirroring that trend.”

Challenger Gray & Christmas has recorded 152,990 cuts since the company began tracking dot-com job cuts in December, 1999.