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Tech Sector Likely Able to Absorb Intel Job Cuts

September 25, 2006
With 10,500 employees being cut from Intel’s payroll during the next year, one question facing both employees and employers is whether the tech market will be vibrant enough to absorb them all.

Early this month, Intel announced it would eliminate about 10 percent of its workforce by mid-2007. The company said the job cuts would come from attrition, workforce reductions and the already announced sale of businesses. Analysts expect that attrition will account for as many as half of the total.

Intel said workforce cutbacks would come from management, marketing and IT functions, but gave no indication on the relative allocation. The announcement came the same day that the Tech Sector Index, published by Forrester Research and the Information Technology Association of America, announced a mixed outlook for technology for the fourth quarter of 2006 and beyond.

With virtually full employment within IT today, the market that IT job seekers will encounter beyond the third quarter of 2006 should be a "good" market, rather than today’s "very good" market, according to Andrew Bartels, an analyst at Forrester Research.

"We’re not talking about negative growth, but a slowing of growth," he says. "What that most likely means is not job cuts, but a reduced rate of hiring, especially on the IT department side."

The Forrester/ITAA index stands at or near a four-year high. However, its forward-looking indicators point to only modest growth in the third quarter and weakening results for the fourth quarter and beyond.

The IT Employment Index published September 1 by the National Association of Computer Consultant Businesses shows a 4.3 percent increase in IT jobs during the past 12 months and sizes the national IT market at 3.66 million jobs.

"In a market of this size, several thousand jobs should not have an appreciable impact," says Mark Roberts, the association’s CEO.

Job prospects will likely depend on the particular area of expertise. The IT Employment Index indicates virtually no unemployment within certain skill sets, including computer hardware and software engineers, programmers and network and computer systems administrators.

"Chip manufacturers trade people all the time," says Joel Passen, COO of Gravity, a San Francisco-based recruiting firm that specializes in the IT sector. "But people at the middle-management to director level may have a harder time finding jobs."

In part, it’s because midsize companies have fewer positions at that level, and in part because of the culture of hiring for a narrowly specific experience.

"In Silicon Valley, especially in product marketing positions, companies want to hire people with that domain experience," Passen says.

Suzanne Young