Technology companies are cutting jobs at a faster pace this year compared to last despite signs that the overall economy is doing well, according to a report by Challenger, Gray & Christmas Inc.
The global outplacement consulting firm found that through the first half of 2014, technology employers cut payrolls by 48,402 positions, which translates to 68 percent more jobs that were cut during the first half of 2013. And these figures do not include the recently announced plans by Microsoft to reduce its workforce by 18,000.
The rise in technology sector job cuts is occurring at a time when the overall economy is starting to pick up steam, notes John Challenger, CEO of Challenger, Gray & Christmas. But increased job cutting is not always a sign of an industry in decline, he adds.
“The technology is, in fact, one of the bright spots of the economy,” Challenger says. “Many employers are actually having difficulty finding technology workers with in-demand skills. Many of the job cuts we are seeing are more indicative of an industry in transition than of one in decline.”
Challenger notes that tech giants like Hewlett-Packard and Microsoft are looking to streamline operations as they adapt to new market demands for smartphones and tablets and the shift away from hard drives to cloud-based servers.
“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 says. “Even in the strongest economy, companies may make significant adjustments to their payrolls. The surgeA transient variation in the current and/or potential at a point in the circuit. in technology sector job cuts this year are a sign of an industry adjusting to growth, rather than of one adjusting to contraction.”
