From the constant drip of tech industry layoff announcements, you'd think huge numbers of IT workers would be out on the street. And certainly Cisco, Dell, Hewlett-Packard, IBM, Intel, Oracle, SAP, Sun, and others have announced thousands of layoffs. But the numbers they report don't reflect actual people losing their jobs, so the real tally of tech workers who have found themselves jobless is significantly smaller than you'd think.
"I honestly do not think the tech sector is in as bad a shape as it might appear," says Frank Scavo, managing partner at Strativa, a technology management consulting firm. "IT executives have been quite conservative in their IT spending growth over the past several years. And when the economy took a downturn last year, they were pretty quick to make cuts."
[ Good IT news amid the gloom: Two firms project that 2009 will bring salary increases, InfoWorld reported last week that tech is still a safe career choice today, and despite the economy, certain IT skills remain in demand. ]
The grim initial picture
To be clear: The economy is bleak, and tech vendors are taking necessary action. "IT vendors are protecting themselves against what most now assume will be a weak market throughout much of 2009, with IT spending cutbacks spreading to other sectors like software applications and network infrastructure," explains IDC analyst Stephen Minton.
Indeed, last month saw a raft of layoff plans like no other in the portion of the tech industry that supplies business IT. Microsoft said it will reduce its workforce by 5,000, Intel will cut 6,000, Sun said an ongoing worker reduction could stretch toward 6,000, SAP revealed intentions to ratchet down its total headcount by 3,000, Oracle axed 500, and even IBM, which reported positive earnings, confirmed layoffs. Although Big Blue did not provide an exact number, a union Web site for IBM employees put that at about 4,200 and reported rumors that it could soar as high as 16,000. What's more, Dell warned in December that it would cut as many as 8,900 employees worldwide.
Late last week, Cisco Systems CEO John Chambers said the networking giant may eliminate 1,500 to 2,000 jobs, a move that Chambers said he hopes would enable Cisco to avoid larger layoffs like other tech stalwarts were forced to put into practice.
So from these announcements from just the major tech vendors, that's as many as 35,600 jobs lost, not counting the remainder of the 16,000 rumored layoffs at IBM or the 24,600 people Hewlett-Packard said last year that it would let go as part of its EDS acquisition.