Tech sector still bleeding jobs

Date: Thursday, April 03, 2003 1:27 AM

H-1B and JOB DESTRUCTION NEWSLETTER

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http://www.eet.com/story/OEG20030324S0022

Ten percent loss in two years was worse than expected, AEA says: Tech
sector still bleeding jobs

By Margaret Quan and Anthony Cataldo, EE Times
March 24, 2003 (9:53 a.m. EST)
URL: http://www.eetimes.com/story/OEG20030324S0022

San Jose, Calif. - Job prospects for U.S. technology workers have gone
from bad to worse as the unemployment rolls continue to swell and as
companies outsource more of their engineering work to contractors based
offshore.

In a report released last week, the American Electronics Association
(Washington) reports that the U.S. high-tech sector lost about 560,000
jobs-a 10 percent decline-between January 2001 and yearend 2002, with
tech employment totaling 5.1 million jobs at the end of the period.

The numbers stand in sharp contrast to a similar AEA report issued in
October, when the group said it was "cautiously optimistic" about
future employment prospects because the drop between May and June 2002
had totaled just 700 jobs-the smallest monthly decline recorded in a
year and a half.

Overall, the high-tech sector was down by 113,000 jobs for the first
half of 2002, the AEA said in October. But with 123,000 more jobs lost
during the last six months of the year, "this doesn't point to an
imminent turnaround," the latest report concludes.

And "there's no way to tell when we will hit bottom or when we will
come out of this [recession]," Michaela Platzer, AEA vice president of
research, said last week.

Observers fear the slide could threaten the United States' position as
a technology leader. Basheer Janjua, the chief executive of design
services company Integnology Corp., said that some of the most capable
engineers have been sent packing with little hope of finding work.

"Over the last six months I've been getting 50 to 60 resumes every day,
as well as personal e-mails," he said. "These are Ivy Leaguers coming
from top-notch Silicon Valley companies. These are the people on the
street. Some of them are grown men who are brought to tears explaining
their situations with their families."

And the hemorrhaging of U.S. jobs may not be over. Just a few days
before the AEA released its job loss numbers, leading semiconductor
equipment maker Applied Materials Corp. said it would lay off 2,000
workers-1,400 of them in the United States-in response to chip makers'
slashing orders, snapping a brief uptick in demand last year (see
story, page 20).

Applied's decision to lay off 14 percent of its work force is
indicative of the grim prospects for high-tech manufacturing, which has
been the hardest-hit sector. According to the AEA, manufacturing
employment fell by about 415,000 jobs over the two-year period, and
communications services lost 135,000. The only sectors to gain were
software services, which added 5,300 positions, and electromedical
equipment manufacturing, which gained 500 jobs nationwide.

Electronics manufacturing was hardest-hit segment, as total number of
high-tech jobs fell 10 percent.

While calling current economic conditions "very tough," AEA's Platzer
noted that the industry remains in marginally better shape than during
the recession of the early 1990s, when employment fell below 5 million.

But there's evidence that U.S. technology companies are increasingly
outsourcing their engineering requirements to offshore concerns, a
trend that could further diminish prospects for job seekers here.
Janjua of Integnology said he has observed U.S. companies turning in
increasing numbers to India, China and Russia for their engineering
work, ignoring the large pool of idle talent here. He said he has hired
12 engineers since December but that many prospective customers are
turning a deaf ear when asked to consider choosing his company's
services over those of offshore firms.

"Yes, you can save money, but at what cost?" he said. "We're not saying
outsourcing is bad. But if you can do the project with better quality
and better reliability in the U.S., then why not?"

Moreover, Janjua said, U.S. engineers are not so pricey now. "People
who were making $110,00 and $130,000 in 1999 are asking for just
$40,000 to $50,000. It's just enough to eat."

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