Dot-Com Layoffs Up 23% Over December Tally
The ongoing dot-com shakeout claimed nearly 13,000 jobs so far this month, a 23% increase over December and the seventh month in a row of mounting layoff and shutdown announcements, according to a private report released Monday.
By comparison, 303 job cuts were announced by dot-coms in January 2000, according to John A. Challenger, chief executive of Challenger, Gray & Christmas Inc., a Chicago-based outplacement firm that tracks layoff notices.
The January tally is a record in the short life of Challenger’s dot-com misery index and reflects some larger cutbacks for the sector, such as EToys Inc.’s announcement that it will lay off 700 of its 1,000 employees. It also includes dot-com support businesses, such as Internet consulting company Marchfirst Inc., which announced 500 layoffs this month.
Since December 1999, when Challenger began tracking them, 502 dot-com companies have announced layoffs and 108 have shut down, involving 54,343 jobs.
Despite the mounting losses, displaced dot-com workers with technical skills appear to have little trouble finding new jobs.
“The job market is still very, very receptive,” Challenger said. “There’s no stigma attached to having worked for a dot-com or a failed dot-com. . . . The technology people especially are still in great demand. We’re still way short of the number of people we need in technology.”
The employment prospects for displaced dot-comers with marketing, content, office and other nontechnical skills vary but are generally not as good, Challenger said.
The government does not track employment in the dot-com sector. But in the second quarter of 2000 an estimated 360,718 people were employed by dot-coms, down slightly from 362,487 in the first quarter of 2000, according to a report released last year by the Center for Research in Electronics Commerce at the University of Texas. By comparison, in December the number of people employed overall was 135.8 million.
Center director Andrew Whinston said anecdotal evidence suggests employment is continuing to shrink among dot-coms, which the researchers define as companies that derive 95% or more of their revenue from the Internet.
“We are guessing that dot-com employment is falling, although we’d predict that the total employment related to the Internet economy is growing,” Whinston said.
Internet job postings for people with high-tech skills remain plentiful. And some dot-com employees are not waiting for pink slips to hit their mouse pads before they flee to the perceived security of software and other more traditional companies.
“When I talk to some of my friends at dot-coms, they say their problem is holding on to engineers,” said Hal Varian, dean of the School of Information Management at UC Berkeley.
The dot-com employees are saying, “ ‘My options are underwater. Why don’t I go work for Sun [Microsystems]?’ ” Varian said. “It’s really a question of where they are going to be employed, not whether they are going to be employed.”
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Displaced Internet Workers
Misery mounted this month when the number of announced dot-com layofffs exceeded that of December by 23%.
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January: 12,828
Source: Challenger, Gray & Christmas Inc.
