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Dot-Com Job Cuts Near Two-Year Low

By Keith Regan
Mar 4, 2002 10:45 AM PT

Dot-com job losses dipped below 1,000 in February, falling to their lowest level in nearly two years, according to a new report from Challenger, Gray & Christmas (CGC).

Dot-Com Job Cuts Near Two-Year Low

The Chicago-based outplacement firm said 670 dot-com positions were eliminated last month, down sharply from the 1,802 layoffs announced in January.

The February count is the lowest since April 2000 and continues a trend of steadily declining job losses that began in April 2001. Last February, Challenger recorded more than 11,000 dot-com job cuts.

Mixed News

But besides indicating a possible stabilization of the online economy, the drop may also mean that the Internet sector has few jobs left to lose, according to John Challenger, the firm's CEO.

"Dot-coms are out and e-commerce is in," Challenger told the E-Commerce Times. "It's no longer about startups and pure virtual dot-coms. Instead, every retailer -- and, for that matter, every business -- is looking to find ways to improve its IT and back-office operations to take advantage of the opportunities on the Web."

Challenger, who has been tracking Internet job cuts since December 1999, said more than 144,000 dot-com positions have been cut since then.

"[Dot-com] ranks have been decimated, and right now there is no indication that we are going to see a major rebound in hiring," Challenger said in the report. "Companies that survived the collapse did so by cutting back to the bare bones and, despite these measures, many are still waiting to see their first profits."

Financials Hit

February dot-com job losses were concentrated mainly in the financial services sector, which shed 300 positions.

Consumer services saw the next biggest decline in employment, with 159 job cuts. The battered technology sector saw 110 layoffs, marking the first time since October that the sector did not lead the layoff parade. The tech sector includes e-commerce software makers, which have been hammered by financial losses and job cuts in recent quarters.

February job cuts were minimal in other sectors, with 53 recorded at entertainment Web sites and 24 each at online retail and media companies.

Trend Tracks

It has been nearly a year since the peak of the dot-com shakeout, according to Challenger's numbers. In April 2001, job cuts peaked at 17,554.

With the exception of October, when the effects of September 11th prompted a slew of layoffs in travel and other sectors, job cuts have been falling ever since.

However, Challenger noted in the report, "it could be years before the Internet begins to live up to its potential. At that point we may start to see hiring increase, but we will probably never again see the type of build-up that occurred in the late 1990s."

Instead, Challenger told the E-Commerce Times, Internet-related job growth will be less conspicuous and will be spread across multiple industries.

"Jobs will be added in fields related to e-commerce, but that doesn't mean they'll be showing up as e-commerce or Internet jobs," he said. "The tasks of adapting to the Web are becoming part of every other industry."


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