Layoffs Becoming Necessary Evil For Tech Companies

When I wrote about poor job prospects earlier this month, I quoted John Challenger, CEO of the recruitment firm Challenger, Gray and Christmas, who said that companies plan to cut costs, which means that many of them will have to cut staff. This is.

That’s exactly what seems to be happening on the West Coast, where a number of startups (as well as big companies such as eBay) are laying off workers in hopes of surviving the recession. According to the Los Angeles Times, among the companies that are reducing sales are zillow, Pandora, AdBrite, Hi5, Jive Software, Redfin, Seesmic, and zIVE. Seesmic founder and CEO Loic Le Mer says the dismissal of a third of his company’s employees is the only way to keep the business in difficult times. He compares the decision to “giving me another round of funding.”

Layoffs are a less acceptable alternative to rounding up capital, but may become necessary for more companies as funding sources run out. According to USA Today, only 270 venture deals with technology companies were made in the third quarter of 2008, the lowest quarterly figure since the first quarter of 1996. Not only that, but also the Silicon Valley Venture Capitalist Confidence Index, followed by university business. Professor Mark Cannis of San Francisco fell to 2.9, the lowest in its five-year history.

Unlike previous recessions, including the dot-com crisis, this time experts predict a much wider group of industries. Katie Page, Manpower’s vice president, told BusinessWeek that “this is a recession of equal opportunity.” For most businesses, the reduction is likely to come first to any inefficient area, followed by non-core departments such as marketing, communications and human resources.

While almost all industries, including technology, will be affected, technology may not suffer as much as from dotcom exposure, writes Don Kawamoto of CNET News. This is due to the fact that few technology companies with staff on the scale of the late 1990s.

Not only that, writes IT Business Edge blogger Dennis Byron, many companies will struggle for significant cuts just because the technology is so firmly entrenched in their business. He wrote:

«… For the first time in the company’s history, IT services are similar to some of the rescued companies that have received all kinds of government funding in recent weeks. In other words, IT is “too big to fail.” In the activities of any business – and, more importantly, in the interaction of each business with its customers and suppliers – there is something that can not be arbitrary budget cuts.”

What’s so good about that? Some people think so, including Jonathan Weber, editor of NewWest.Net. Weber writes for The Times Online that, depending on the outcome of the next presidential election, the U.S. government may intervene to strengthen the technology economy by funding more fundamental research that could lead to technological innovation, and initiating lending programs. Small business administration. benefiting entrepreneurs.


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