When I wrote about the dimming outlook for jobs earlier this month. I quot John Challenger, CEO of recruiting company Challenger. Gray & Christmas, Layoffs as saying that companies were intent on cutting costs. With the implication that many of them would have to cull staff to do so.
Layoffs That’s exactly:
What seems to be happening on the West Coast, where a number of startups (as well as bigger companies like eBay) are laying off employees in hopes of making it through the recession. Among the companies making cuts, reports the Los Angeles Times, are Zillow, Pandora, AdBrite, Hi5, Jive Software, Rfin, Seesmic and Zivity. Seesmic founder and CEO Loic Le Meur says that laying off a third of his company’s staff is the only way to keep his company going in tough times. He likens the move to “giving myself another round of funding.”
Layoffs are a less palatable alternative to rounding up capital but may become necessary for more companies as funding sources dry up. As USA Today reports, 2008’s third quarter saw just 270 venture capital deals for tech companies, the lowest quarterly number since Q1 1996. Not only that, but The Silicon Valley venture capitalist confidence index track by University of San Francisco business professor Mark Cannice fell to 2.9, the lowest reading in its five-year history.
Unlike previous downturns:
Including the dot-com bust, experts prict a far broader group of industries will be affect this time. Cathy Paige, a vice president of Manpower. Tells BusinessWeek that “this is an equal-opportunity recession.” For most companies. Cuts will likely come first in any under-performing areas. Follow by non-essential divisions such as marketing, communications and human resources.
While just about every sector, including tech, will be affect. Tech may not suffer as much as it did in the dot-com. Fallout, writes CNET News’ Dawn Kawamoto. That’s because few tech companies have staff up on the scale of the late 1990s. Without the inflat hiring patterns that characteriz those pre-bust days. Tech unemployment numbers are still holding. True to their typical pattern, about half the national average.
Not only that Layoffs:
Writes IT Business ge blogger Dennis Byron. But many companies will find it difficult to make sweeping cuts simply. Because technology is so well entrench in their business. He writes:
“for the first time in business history. IT is like some of the bail-out companies that receiv all kinds of government money in the last few weeks. That is, IT is “too big to fail”. IT is so intrinsic to the operations of every enterprise – and more importantly. Each enterprise’s interaction with its customers and suppliers – that its budget can’t be arbitrarily cut.”
Will any good come of this Layoffs?
Some folks think so, including Jonathan Weber, itor-in-chief of NewWest.Net. Writing for Times Online, Weber posits that, depending on the outcome of the upcoming presidential election, the U.S. government could step in to bolster the tech economy by funding more basic research that can lead to technological innovation and by tweaking Small Business Administration loan programs to favor entrepreneurs.