Tech Industry

Dot-com job cuts surge as year winds down

December marks the seventh straight month in which dot-com job cuts increased from the previous month, a new study finds.

As stock prices for many Internet companies end the year at record lows, the number of layoffs in the sector just gets higher and higher.

December was the seventh straight month in which dot-com job cuts increased from the previous month, a new study found. And from the first half of the year to the second, the number of cuts leaped sevenfold.

Job cuts for the period from Nov. 27 through Dec. 26 rose 19 percent from November's record of 8,789 to the December tally of 10,459, according to a study released Wednesday by international outplacement firm Challenger Gray & Christmas.

One of the latest companies to be hit by job reductions is business-to-business services start-up Collaborex, which cut about one-third of its staff in mid-December, a company representative confirmed. The Fairfax, Va.-based company, which launched in July, eliminated roughly 43 jobs from a total of 131 employees and said the layoffs are a result of overall market conditions and a slowdown in spending by customers for its services.

Collaborex, which couples traditional business and consulting services with hosted business-to-business software and technology support, said it remains optimistic that integration services in the world of exchanges and online marketplaces will continue to see increased demand.

Meanwhile, Hispanic portal Quepasa.com, which recently laid off more than two-thirds of its work force, said Wednesday it will have further job reductions as it goes through the liquidation process. On Wednesday, the struggling dot-com announced plans to sell all of its assets, including its Web site business; its three subsidiaries, RealEstateEspanol.com, Etrato.com and Credito.com; and all other furniture and equipment.

Though the total number of layoffs announced this month was higher than last month, the job cuts came at a slower pace, according to Chicago-based Challenger Gray. November represented a 55 percent jump from October, when 5,677 jobs were slashed by dot-coms.

Since Challenger Gray began tracking layoffs at dot-coms in December 1999, the firm said it has recorded roughly 41,515 job cuts from about 496 companies. The new study showed that 91 companies, or 18 percent of dot-com companies tracked, have since gone out of business.

A sevenfold increase
From January through June, dot-com layoffs totaled 5,097, according to the study. In comparison, between July and December, about 36,177 cuts were announced, representing a 600 percent increase over the first half of the year.

Most of the job cuts have come from Net companies that specialize in activities such as consulting and financial and information services. Layoffs in this area totaled 19,535, or 47 percent of the aggregate job cuts since December of last year, according to the study. E-tailers marked the second-largest group to trim their work forces, with 9,523 positions eliminated in total.

During the holiday month, a slew of Internet consulting companies trimmed their work forces to cut operational costs and remain afloat in a changing competitive market. Net consultants including Xpedior, Scient, Lante, Viant, Agency.com and AnswerThink all announced layoffs during the month of December, some just days apart.

Older Internet businesses including Priceline.com and HomeGrocer.com also sounded off with their own work force cuts amid sour market conditions. Priceline, the struggling "name your price" e-commerce site, trimmed its work force by 11 percent and has said it will postpone the introduction of new services.

"In the first six months (of 2000), all you heard about were job fairs, lavish recruiting parties, and after-hours mixers where would-be entrepreneurs hoped to meet free-spending venture capitalists," Challenger Gray chief executive John Challenger said in a statement.

"Now, pink slip see special report: Fired!parties are the rage, where newly jobless dot-com workers commiserate, exchange resumes and talk about the good ol' days, which of course were only six months ago," he added.

Looking ahead, Challenger Gray noted in its study that with the general wariness among investors about dot-com prospects, it is unlikely that the industry will see a return to the high-flying era when new dot-coms seemed to be sprouting every few days with over-the-top initial public offerings.

Many former Net workers may avoid jobs with start-ups and venture back to established companies, particularly brick-and-mortar types that are slowly expanding on the Net, the study found.