Tech industry slashing jobs again

Twofold increase in first-quarter job cuts fueled by telecommunications mergers, Challenger, Gray & Christmas says.

Alorie Gilbert Staff Writer, CNET News.com
Alorie Gilbert
writes about software, spy chips and the high-tech workplace.
Alorie Gilbert
Technology companies cut nearly 60,000 U.S. jobs in the first three months of the year, twice the number trimmed in the same period last year and the biggest loss of jobs in the sector since late 2003, according to a new report.

The telecommunications industry accounted for the bulk of the cuts, with more than 35,000 layoffs in the first quarter, said outplacement firm Challenger, Gray & Christmas, which issued the report Monday. The computer industry laid off about 16,100 workers.

The firm attributed the jump in job cuts to a surge in telecommunications mergers, such as the purchase of AT&T Wireless by Cingular Wireless.

The phone industry may continue to shed jobs. SBC Communications said recently that it would cut about 13,000 positions if its purchase of AT&T withstands government review. Meanwhile Qwest Communications' proposed buyout of MCI calls for the elimination of as many as 15,000 positions. Sprint's merger with Nextel is also pending.

The software industry is not immune either. Oracle cut about 5,000 jobs in the first quarter after gobbling up PeopleSoft.

The industry will come under increasing pressure this year as consumers and corporations take a tech-spending breather, the report predicted.

"Consumers and companies have been buying iPods, laptops, portable DVD players, cell phones, BlackBerries, etc.," said John Challenger, chief executive of Challenger, Gray & Christmas, in a statement. "Their technology cup is overflowing, which may lead to a cooling off period until a major technology breakthrough comes along."