Study: Dot-Com Layoffs Taper Off

For the first time in eight months, the dot-com layoff trend appears to be slowing, falling 9 percent in February, according to a report released Tuesday by the job placement firm of Challenger, Gray and Christmas.

Over the past three months, nearly 35,000 Internet workers have been let go -- 12 percent more layoffs than occurred in the preceding 12 months combined.

In January, a record 12,828 employees were laid off by their dot-com employers, but in February, the number dropped to 11,649.

"It may be that we are reaching a turning point where the shakeout is going to start to slow down," John Challenger, chief executive officer of the Chicago, Illinois-based firm, told the E-Commerce Times. "A lot of companies pointed towards year-end as a make or break time, so cuts were really heavy in December/January. So they have pulled back some. It may be a sign we're reaching a peak."

Swimming Lessons

E-commerce fared worse than its Web cousins, however. Online retailers slashed the most jobs within the Internet sector in February, with e-tailer job cuts rising 57 percent from 1,829 in January to 2,874.

Internet portal sites announced 1,516 job cuts in February, up from 945 in January.

As the venture capital community leaves dot-coms to sink or swim on their own, e-tailers are being forced to become self-sufficient, Challenger said.

"The resolve of the financial community to stop providing capital infusions, and force these companies to become profitable, will leave those companies who've found a way to become profitable to go forward in the future," Challenger said. "The good companies are going to find a way to make that happen, by cutting costs, finding revenue and becoming viable."

Immunity Challenge

According to Challenger, the shakeout is not expected to end until the dot-com space is only left with companies that are profitable, or nearly so.

"There's too many companies chasing after not enough revenue," Challenger said. "The cuts will continue until there's a small number of players per niche so the available revenue can support all of them."

A Few Technicalities

Challenger said that although technology workers, such as programmers and network managers, should be able to find new work relatively easily in other technology sectors, the shakeout may leave other dot-com workers behind.

"The workers that will probably have longer job searches are the content developers, marketing people, customer service and office people," Challenger said.

"Their searches could be particularly tough if they choose to stay in the dot-com arena, where new companies will most certainly continue to pop up, but the growth rate and need for employees will not be nearly as explosive as it was in recent years," Challenger added.