Downsizing on rise at computer companies

While telecommunications workers finally are seeing a reprieve from heavy job cutting, downsizing among computer firms is on the rise. Hewlett-Packard, for instance, plans to eliminate 14,500 positions over the next several quarters.

"[This] is one more example of how badly the computer sector is struggling. Among the largest job-cut announcements this year, two have come from computer firms," notes John A. Challenger, chief executive officer of the global outplacement firm of Challenger, Gray & Christmas, Inc., Chicago.

"The biggest question--the one no one seems to be asking--is why are computer firms cutting jobs now. The economy is growing at a healthy pace and employers are adding workers, but the tech sector, which led the expansion of the 1990s, is strangely absent from the recovery. Companies should be pouring money into new computers and software. Instead, they appear to be sitting on their cash.

"One answer," offers Challenger, "may be that companies no longer invest in each new round of updated technology, a practice that is really hurting an industry that has long relied on forced obsolescence."

However, "The cuts are mostly occurring in support functions, such as human resources, information technology, and finance, areas that can be outsourced."

COPYRIGHT 2005 Society for the Advancement of Education
COPYRIGHT 2005 Gale Group