Tech layoffs could hit highest level since 2009

Layoffs in the technology sector could reach their highest level in five years, according to a group that tracks employments trends.

So far this year, tech employers have announced plans to cut payrolls by 48,402, a 68 percent increase over the 28,883 layoffs announced during the same period in 2013, according to a special report released Monday by Challenger, Gray & Christmas.


At the current rate, the 2014 year-end total could be the highest since 2009, when tech-sector job cuts hit 174,629.  

The highest total on record was 695,581 job cuts in 2001, when the tech bubble in the stock market burst.

The job cuts in the sector this year were well ahead of last year's pace even before Microsoft announced plans this month to reduce its workforce by 18,000.

The six-month total for the sector nearly surpassed the 56,918 planned cuts announced in all of 2013.  

The tech sector includes computer, electronics and telecommunications industries.

The heaviest cuts occurred among computer firms, which announced 30,002 planned layoffs this year. That was 51 percent more than the 19,930 job cuts tracked during the same period a year ago.

Job cuts in the telecommunications industry increased 342 percent to 13,044 this year from 5,214 in the first half of 2013.

Meanwhile, job cuts announced by the electronics industry were up 43 percent from a year ago, rising to 5,356 from 3,739.

"Increased job cutting is not always a sign of an industry in decline,” said John Challenger, the group's chief executive officer.

“The technology is, in fact, one of the bright spots of the economy. Many of the job cuts we are seeing are more indicative of an industry in transition than of one in decline.”

For example, Hewlett-Packard, which announced it would reduce its workforce by as many as 16,000 employees, is trying to catch up with consumers switching from personal computers and printers to smartphones and tablets.

“The technology sector is stronger than ever, but it has always been an area of frequent and rapid change," Challenger said. "Tech jobs, going forward, will not necessarily be confined to technology firms; the biggest growth will be in industries such as healthcare, manufacturing, automotive and retail."

Recent reports show that the technology sector is poised for growth. In April, a worldwide tech industry outlook concluded that global spending on information technology will increase 3.2 percent to $3.77 trillion in 2014.  

“So, when we see large job-cut announcements from the likes of Microsoft and HP, it should not be assumed that the entire industry or the economy, as a whole, are in distress," Challenger said.

"Even in the strongest economy, companies may make significant adjustments to their payrolls. The surge in technology sector job cuts this year are a sign of an industry adjusting to growth, rather than of one adjusting to contraction."