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News > Companies
Dot.com layoffs continue
May 29, 2001: 2:10 p.m. ET

But industry report indicates IT workers may find jobs outside of West Coast
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NEW YORK (CNNfn) - May was another turbulent month for the technology sector, as jobs continued to be cut and dot.com firms continued to fall by the wayside.

According to a report by outplacement firm Challenger Gray & Christmas, 13,419 jobs were cut in May, the second-highest monthly total on record. The May figure is down 24 percent from April's record high of 17,554.

The slight drop in May layoffs is offset by the number of failed dot.com companies, which increased 123 percent, from 13 to 29, in that one-month period. The 29 closings are just 2 shy of the record number of closings 31 that took place in November 2000.

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These numbers are the latest notch in a steep incline that began in May 2000, when 2,660 layoffs and 8 closings occurred.

"It was May 2000 when we saw dot.com job cuts really begin to escalate. Prior to that, cuts averaged a couple hundred a month," said John A. Challenger, CEO of Challenger Gray.

"In May [2000], announcements leaped into the four-figure range and have not dropped below since. In fact, over the last six months, the average has jumped up to five figures," Challenger said.

But Challenger does not believe the public should give up on the information technology (IT) sector.

"Despite the slump we are seeing among dot.coms and technology firms in general, it would be a mistake to discount or underestimate the impact these areas have had and will continue to have on the economy as well as our society," he said. "This is evident from the enormous demand that still exists for people with high-tech skills."

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Total technology layoffs to date this year stand at 64,983, 58 percent more than the 41,214 cuts announced in all of 2000. Only 3,315 layoffs were announced in the four-month period January to May 2000.

For the third consecutive month, IT firms, which manufacture servers, networking devices, telecommunications services and equipment, led all other dot.com business categories with 5,860 job cuts.

In second place were companies offering consumer services, which announced 3,462 cuts in May. Professional service firms announced 2,265 cuts.

However, there may be a silver lining to this dismal dot.com situation. In an executive summary of its April report, the Information Technology Association of America said IT companies in the United States will hope to hire about 900,000 employees, but 425,000 positions will remain unfilled due to "a lack of applicants with the requisite technical and non-technical skills."

For Challenger, this means that experienced IT workers in the San Francisco Bay area and Pacific Northwest will be able to find opportunities in other areas of the country that are starving for high-tech workers.

"Displaced tech workers in ultra-costly Silicon Valley cannot afford to wait around for the next technology surge, living unemployment check to unemployment check. The rest of the country urgently needs people with technology and e-commerce experience," he said.

"So many have gone to the well to get their experience in the West; now we need to see them fan out and spread that knowledge where they are needed," Challenger said. graphic

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.