Job Cuts in Tech Sector Soar, Report Finds
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The U.S. technology sector suffered another round of widespread layoffs during the third quarter, with computer firms slashing jobs most aggressively, a report said on Monday. -Reuters
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Company plans to cut up to 7000 jobs this year as it transitions to digital technologies.
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NEW YORK  - Planned job cuts at U.S. firms climbed during November, a report said on Tuesday, in a further sign of sluggishness in the labor market.
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InfoWorld - The Software & Information Industry Association (SIIA) released a report on Thursday that painted a rosy picture of the sector's fortunes, one that stands in stark contrast to widespread fears of a recession in the U.S.
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THE US IT sector lost more than 403,000 jobs between April 2001 and 2004 and the future of the job market is looking bleak. According to a report prepared by the University of Illinois-Chicago, half of the
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SEATTLE -- The job market has been depressed in recent years, but tech workers might find it downright depressing. Researchers from the University of Illinois-Chicago have found that the US information tech
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(InfoWorld) - The outsourcing and offshoring of software development work has become such an ingrained part of the technology industry in the U.S. that stories about it no longer rouse the public's interest as they did even a few years ago. That means the only way to gauge the growth of the phenomenon is by watching the bottom line of outsourcing giants like India's Wipro, which recently reported a 41 percent jump in revenue in its latest fiscal year, and the heated debate in Washington over the number of H-1B high-tech visas that the federal government grants. But the runaway growth of offshoring has created its own problems in countries like India, where a substandard infrastructure and stiff competition for talented workers has changed the economics of setting up shop outside the U.S. The decision to hire a staff in India "wasn't even a second thought" when Munjal Shah, CEO of RiyaÂ , was laying the groundwork for his visual search startup back in 2004. (Riya is part of InfoWorldâs Month of Enterprise Startups feature.) "At 30 percent wage rates [the ratio of an Indian salary to a U.S. salary], it still was worth the communication overhead, the travel, and the late-night conference calls," Shah recalls. Those were the good old days. Today, wages in India have risen so much that maintaining development operations in Silicon Valley and India no longer made sense, forcing Riya to make what seems like an unusual decision: In April, the company nixed its Bangalore operations and consolidated operations back in the company's Silicon Valley headquarters. In the end, the cost advantages of lower Indian wages did not outweigh the efficiency losses that came from maintaining some 35 employees in two offices, 12 hours apart, Shah said.Â  Indian software development shops have been the workhorse for countless high-tech firms and U.S. enterprises for more than a decade. But steady demand for development talent is erasing some of the cost advantages that offshore development outfits have enjoyed, according to a report by Gartner. In fact, the wage rates for Indian software engineers will reach between 40 to 50 percent of Silicon Valley wages by 2008 with the gap continuing to narrow after that.Â  Wage increases for Indian engineers averaged 15 percent from 2005 to 2006, compared with a 3 percent average increase for U.S. engineers, according to a recent Gartner report. That's not to say that things will be even-steven any time soon, though. "Even if Indian salaries continue to grow at 15 percent annually, it would take 16 years for Indian software engineers to catch their U.S. counterparts," the report says. But wages among startup employees have been growing much faster than that, especially among top engineers in Bangalore, Shah said. A native of India, Shah paid a premium to hire experienced graduates of the prestigious Indian Institute of Technology. Unlike IBM or Infosys, a startup doesn't have the resources to train the brand-new graduates who would work for smaller salaries. "Startups aren't places where you train people from the ground up," Shah said. "They're places where either you know what you're doing or you don't. We paid to hire the best." To that end, Shah said, wage increases among his engineers in Bangalore tended toward twice the national average. "Salary increases have been 30 percent for more than a year now," Shah said; the engineers who lost a job when Riya decided to close the Bangalore office all have received multiple job offers with significant wage increases, he said. Differences in the high-tech cultures of the U.S. and India also play a part. Indian workers are less likely than their Californian counterparts to be wooed by the prospect of working for stock options instead of cash.Â  "In Silicon Valley, you see your friends from Google driving around in new Ferraris, and you think, 'Huh, occasionally this actually works,'" said Shah. "But there's no comparable value for options [in India]."Â  And without the lure of options that might someday make a software engineer wealthy, money isn't just one reason for a Bangalore engineer to join a company â it's the only reason.Â Â  "If you can't build a core loyalty with options, then you're in for a tough time," said Keerti Melkote, cofounder of wireless LAN hardware company Aruba, which went public in March. Aruba tried outsourcing to India shortly after the birth of the company in 2002 but found that it slowed down operations too much for it to be worthwhile.Â  "You need a critical mass for offshoring to work -- a whole project as opposed to part of one project -- and for a startup, offshoring might not make sense. Especially now, the loaded cost of all the late-night conference calls is high enough that it might not make sense." Melkote said that with its growth in the last few years, Aruba can now afford to support a fairly autonomous Indian operations center in Bangalore. But startups don't have that option. "We found that if you gave a guy less than a 30 percent salary increase every year, then he'd walk," Shah said. "By the middle of this year, we would have been paying [the Indian engineers] 75 percent of a U.S. salary, and at that point, it doesn't make sense because of all the other overheads that take away from productivity." What kinds of overheads you ask? "On average the power probably goes out three or four times a day," said Fran Karamouzis, a research vice president at Gartner who specializes in outsourcing issue. âYou get surges for 15 or 20 minutes, and if you don't have adequate power supplies, then that's a big issue." Thatâs a big issue for startups, whose employees often work odd hours from home, Shah said.Â  Of course, infrastructure problems are nothing new and are considered par for the course in India, but with competition from China, Russia, Eastern Europe, and even Vietnam and Africa, unreliable infrastructure is starting to cost India business, such as Intel's recent decision to locate a $2.5 billion chip plant in China. The nature of work at a startup makes them even less tolerant of those kinds of risks than companies like Intel. "If you're a startup and you're doing a lot of iterative design and you constantly need a higher level of agility, you might find it more burdensome than the cost differential is worth," Karamouzis said. On the other hand, "If you can give the Indian team things that are clearly delineated that they can own and drive on their own, then it works out pretty well," said Pejman Roshan, cofounder and senior director of marketing at Agito Networks, a wireless technology startup in Sunnyvale, Calif. that outsources software coding to a services firm in Bangalore. Roshan acknowledged, though, that the wage gap is shrinking. "I'd heard there was a five-to-one [ratio of Silicon Valley wages to Bangalore wages], and we were salivating at that notion," Roshan said. "We're seeing a three-to-one benefit, and we're still happy with that." Riya's Shah is confident that moving the company's operations back to the U.S. was the right move and expects to see more companies doing the same in the months ahead.Â  "We might be a little bit ahead of the curve in our decision -- maybe six to 12 months -- but I don't think wages are going to stop rising," said Shah, who detailed his decision in his CEO blog, Recognizing Deven. "I don't think weâre isolated." Still, despite wage increases, new startups aren't likely to rule out Indian operations any time soon, Gartnerâs Karamouzis said. In fact, they may have to consider such operations in order to get venture capital. "More often than not, what I hear is that venture companies are almost demanding that [startups] leverage India or Russia both to optimize the cost structure and to maximize a 24-hour cycle to get things done faster," Karamouzis said.
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Planned job cuts in the United States auto industry reached 151,457 this year through November.
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The number of people out of work is on the rise, but a record number of people now have jobs.
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(InfoWorld) - IT has driven nearly all of the economic growth in the United States since 1995, but lawmakers too often ignore the tech industry or create policies that hurt it, according to a report released Tuesday. IT was responsible for nearly all of the U.S. worker productivity growth between 1995 and 2002, says the report, from the ITIF (Information Technology and Innovation Foundation), a pro-technology think tank. IT also creates higher-paying jobs, allows businesses to cut costs through just-in-time inventory management, and boosts new innovations, said Robert Atkinson, coauthor of the report and ITIF's president. While many business leaders and investors may have gotten too optimistic about IT in the late 1990s, some economists and policy makers began to discount its value after the dot-com bust early this decade, Atkinson said during a forum in Washington, D.C., "The pendulum has swung too far the other way," he said. "[Economists] generally don't look at IT as one of the leading drivers of the economy." The U.S. economy is nearly $2 trillion larger now than if the IT revolution had started in 1995, according to the study, titled Digital Prosperity. Growth in the U.S. economy due to IT in the last 11 years is equal to two and a half Indian economies, Atkinson said. Yet many policy makers and economists pay much more attention to other economic factors, such as interest rates or theÂ value of the dollar, Atkinson said. Some federal or state lawmakers attempt to limit IT by passing laws such as those that would slow the rollout of broadband, limit the use of RFID, and slow online personalization efforts by limiting the amount of data companies can collect, he said. "There's going to be a significant cost to the economy if you hinder digital transformation," he said. Atkinson called on the U.S. government to drive forward IT adoption in several industries, including health care, banking, and transportation. While some critics may accuse him of calling for an "industrial policy" favoring tech, Atkinson said he's looking for a middle ground between a complete market-based approach and subsidies for tech vendors. "The reality is, the government's in the health-care market," he said. "Why shouldn't it be doing everything it can to spur digital transformation in health care?" Two speakers at the ITIF's Tuesday event agreed that the IT industry is driving the U.S. economy, but they stopped short of advocating broad new national policies addressing tech. The IT boom is a new phenomenon, and other industries such as bio-IT or clean energy may eventually produce similar economic benefits, said Robert Litan, vice president of research and policy at the Ewing Marion Kauffman Foundation, which promotes entrepreneurship. Robert Crandall, senior fellow in economic studies at the Brookings Institution, a left-leaning think tank, also suggested that U.S. policies toward technology are adequate. The U.S. economy has benefited from technology more than many other economies, including those in Europe that have a much more activist approach to tech policy, he said. The European Union has taken a much more hands-on approach to telecom regulation and antitrust policy than the United States in recent years, he said. But the United States remains ahead of Europe on productivity gains, he added. "We're in rather good shape," Crandall said. "I'm not at all concerned about our public policy."
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Planned U.S. lay-offs rocketed in  August as the housing slowdown and subprime mortgage debacle  led to record job cuts in the financial sector, an independent  report showed on Wednesday.
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Investor's Business Daily - U.S. corporations announced plans to cut 74,986 jobs, up from Dec's 44,416 and 19% above a year ago, according to outplacement firm Challenger, Gray & Christmas. Financial firms slashed 15,789 jobs and drug makers planned to ax 7,628 positions. Job cuts remain below levels of the '01 recession, Challenger said.
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US planned job cuts soared to an eight-month high in September while new hiring rose only slightly, a report said on Tuesday. Employment consulting firm Challenger, Gray &amp; Christmas Inc.
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WASHINGTON - American firms announced the steepest job cuts in eight months in September and also slashed hiring plans, a survey showed.
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NEW YORK - It was the revenge of the nerds in October. The technology sector outperformed all other industries as investors flocked to high-beta issues amid favorable earnings reports.
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A rash of job cuts - more than 10,000 layoffs this week from a handful of companies â-as created some gloom on the job front. But today&#39;s release of jobs data for September was
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Server and software maker says it beat targets, but laid off more workers than expected in the first quarter.