Study: Dot-Com Job Cuts Decline for Third Straight Month

Dot-com firms announced 8,697 job cuts in July, the lowest monthly figure since October 2000 when 5,677 jobs were lost, according to a report released Friday by executive search firm Challenger, Gray & Christmas (CGC).

“I think the decline suggests that we are in the latter phase of the shakeout,” CGC chief executive officer John A. Challenger told the E-Commerce Times. “The companies that are left are not insignificant, although still struggling to be profitable.”

In January 2001, there were 12,828 job cuts from 122 firms, or an average of 105 cuts per company. In July 2001, 55 firms made job-cut announcements, but the ratio increased to 159 cuts per company.

Challenger said it is likely that the job cuts were spread out among fewer firms because so many dot-coms have already gone out of business.

“Among those that are left, we will probably see job cuts come in spurts — cut some each month, hope for a turnaround and then cut more if the situation does not improve,” Challenger said.

According to the executive, many smaller dot-coms with 100 or fewer people were formed in the last year and went through layoffs in recent months.

Less is More

July dot-com job cuts fell 6 percent from June, when 9,216 job cuts were announced, marking the third consecutive month of declines according to CGC.

However, July 2001 cuts were up 296 percent from July 2000, when 2,194 jobs were eliminated. July 2001 is the eighth consecutive time that the monthly figure increased over the same month a year earlier.

Since January, dot-coms have announced 82,896 job cuts, more than double the number announced in all of 2000, which saw a total of 41,214 pink slips.

Sectors Hit

Even though the ongoing decline in the number of layoffs makes it appear as though the back-end of the shakeout is here, Challenger recently cautioned that there would always be job cuts as various dot-com sectors continue to grow and mature.

Dot-coms providing consumer services ranked as the top job cutters in July with 3,843 announced cuts. It was the first time since February that a dot-com business category other than technology had the most monthly cuts.

CGC defines the consumer services sector as dot-coms providing services such as recruiting and grocery delivery. Challenger pointed out that July saw the closure of a large consumer-services dot-com when Webvan (Nasdaq: WBVN) shut down and let go about 2,000 workers.

With a July total of 2,738 job cuts, technology ranked second behind consumer service firms. CGC defines the dot-com technology sector as companies that build and maintain the Internet’s infrastructure, such as servers, networking devices, telecommunication services and equipment.

Help Wanted

While job cuts continue to dominate high-tech news, including recent announcements of layoffs at Hewlett-Packard (NYSE: HWP), JDS Uniphase (Nasdaq: JDSU) and Lucent (NYSE: LU), a number of Internet-based employment agencies are doing better than ever, claiming that more positions are available than can possibly be filled.

According to a recent survey by the Information Technology Association of America (ITAA), U.S. firms will need to fill about 900,000 information technology (IT) slots this year.

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