The generally dire world economic news and equally sour forecasts are having the expected effect on the tech sector of the U.S. economy and are being reflected in planned first quarter 2009 job cuts.

This dire news was gleaned from a report issued today by the outsourcing firm Challenger, Gray & Christmas Inc., who keep track of such statistics as a matter of course. U.S. technology sector firms reported planned job cuts totaling 84,217 positions in the first quarter, which was up 27 percent from 66,312 planned cuts in the fourth quarter. Even worse was the rise in first-quarter technology job cuts compared to the same period in 2008. The reduction in tech sector positions was almost five times higher in the first quarter of this year than the 17,345 cuts planned in the same quarter last year.

In fact, it was the largest quarterly job-cut total for this sector since the fourth quarter of 2002, when there were 133,511 layoffs announced, also according to the report by outplacement firm Challenger, Gray & Christmas, according to a MarketWatch story. Job cuts in the sector, which includes telecommunications, computer and electronics firms, have increased in each of the last five quarters, growing by an average of 42 percent every three months.

Even so, quarterly position elimination figures stayed well below levels reached during the infamous dot.com meltdown in 2001 and 2002. During that historic period in the industry, technology employers announced job cut totals which averaged 145,467 in each quarter, almost double the number of cuts anticipated in the first quarter this year.

John Challenger, chief executive of Chicago-based Challenger, Gray & Christmas, had this to say: “Unfortunately, no industry appears to be immune in this recession. Even the health-care sector, which has consistently added jobs throughout the downturn, is starting to see those gains shrink. And continued job creation in the federal government is being offset by large-scale losses at the state and local level, due largely to a rapidly deteriorating tax base.”

The job losses in the technology sector may not be as large as those in other industries, either as total numbers or percentages. Still, once an industry begins to count positions being eliminated in the hundreds of thousands, something is going to have to give. Businesses will be doing less software development, supporting fewer IT clients, and pioneering fewer productivity increases this year than the last couple of years. That’s bad news for the tech sector, and all of the sectors which rely on technology for innovation.

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Entry was posted on Monday, April 6th, 2009 at 9:26 pm under Software, Technology.

Read more entries by Michael W. Jones.
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