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Dot-com job cuts are coming at a record pace, and the increase
is likely to continue in the coming months, according to a new labor study.
The study, released Monday by outplacement firm Challenger Gray & Christmas, found that job cuts for the period from Sept. 25 through Oct. 20 rose to 5,677, a record for a single month and the fifth consecutive month of increases.
The October figure marks an increase of 18 percent from the preceding month, when struggling dot-coms accounted for 4,805 layoffs. Since December 1999, the total number of job cuts is 22,267, according to Challenger Gray.
Online pharmacy Drugstore.com, Net consulting firm Gen3 Partners,
interactive entertainment site HollywoodTicket.com and online MP3 storage
company Myplay.com are among a growing list of Internet companies that have
trimmed their employee bases in the last month alone. The latest, Stamps.com,
Monday said that it is letting
go 240 employees.
A slew of Net companies also have been reporting bankruptcy or
business failure, as the overall sector continues to suffer following a drastic
technology market correction in April that left many high-flyers wounded and
investors wary.
Despite the recent layoffs, demand for high-tech workers continues to be strong. The need for software engineers, optical networking specialists and programmers is building, while the call for less-technical workers--from content editors to investor relations specialists--appears to be cooling slightly, according to industry observers.
Challenger Gray noted that the upcoming holiday season is crucial to the
survival of many struggling dot-coms, as investors and employees continue to
place their attention on companies' ability to turn profits. Many e-tailers
will need to generate a critical mass of paying customers and find a way to
prove that consumers can find the products they need easily at a reasonable price and get problem-free delivery.
The Chicago-based firm offered a somewhat bleak outlook, projecting that the
worst of the shakeout, especially in the online shopping sector, may well
arrive with the holiday season.
Challenger said 44 of 274 dot-coms, or 16 percent, have failed since last
December. Many of these new Internet companies will disappear completely,
while others will be acquired by brick-and-mortar companies building an
e-commerce arm, the study said.
Dot-coms that focus on consulting, financial and information services
have suffered the most cuts since December, accounting for 36 percent, or
8,113 job cuts. The retail sector was second with 5,450 cuts. About 2,190
job cuts came in the health and fitness sectors.
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