Study: IT job cuts in Q2 down; lowest level since 2000

Fueled by an increase in consumer technology spending and a resurgence of Internet businesses, IT job cuts in the U.S. fell 26 percent in the second quarter of the year to their lowest quarterly total since 2000, according to a study released Thursday by global outplacement consultancy Challenger, Gray & Christmas Inc.

Tech sector job cuts fell to 29,226 for the quarter ending June 30, down from 39,379 in the first quarter of the year, according to the study. The latest figure is the lowest since there were 26,583 job cuts reported in the Challenger study in the third quarter of 2000.

The second quarter numbers are 26.4 percent lower than the same period a year ago, when the study listed 39,720 IT job cuts.

For the first half of this year, the number of tech job cuts, 68,605, is 31 percent lower than in the same period of 2005, when 99,257 tech cuts were announced.

Tech sector jobs include those in the telecommunications, computer, electronics and e-commerce industries, according to the study.

But all the news is not good, according to the study. Recent rises in energy costs could soon affect IT spending and hiring across the economy, said James Pedderson, a spokesman for Chicago-based Challenger, Gray & Christmas.

"Businesses are looking at all their costs now," Pedderson said. "There are higher energy costs, higher health care costs, so they're beginning to cut back. They may cut back on new technology... until things clear up" and fuel prices begin to decline.

Also affecting future IT job cuts are recent corporate mergers and acquisitions, particularly in telecommunications, he said. "Tech is so volatile anyway," he said. "Plus, with the mergers, we can see a boost in job cuts, even though things may be going gangbusters."

Even if the overall technology market is going well, Pedderson envisioned "a boost in job cuts in the next quarter or two" because of the effects of recent mergers and acquisitions.

In the first half of the year, mergers and acquisition activity was the leading reason for technology sector job loss, according to the study, resulting in 24,801 cuts, or 36 percent of all tech-sector job losses through June.

In comparison, the tech sector job market has become significantly more stable since 2001 and 2002, when job cuts averaged more than 100,000 per quarter, according to the study. Tech-sector hiring announcements soared 184 percent to 14,090 in the second quarter, from just 4,944 in the first three months of the year. Second-quarter hiring was led by computer companies announcing plans to add 11,770 workers

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