Is tech industry heading for a slowdown?

The world has staged a smart recovery  since the grueling 18-month economic recession two years back. But, it seems the technology sector has still not recovered from the ill-effects of downturn faced by the economies back then. If we take the IT segment in consideration, A series of Layoffs, lower than expected earnings and downsizing have become frequent terms with the technology industry.

Experts have been forecasting dark clouds of more possible layoffs looming over the biggest tech product and service players of the world. Analysts in Indian technology and consumer electronics market have also intensified a tough ride ahead.

Like, one can easily sense the trend of a flagging economy; many companies even after generating revenue in billions, are trimming their estimates for growth in the upcoming quarter. In fact, many tech bigwigs have posted a gloomy outlook for the entire year as well.
After a flourishing start, the world’s superpower is facing a serious employment crisis with the months passing. In May, the tech sector recorded only 54,000 news jobs. To recover itself from the job crisis, however the US would have to create 250,000 jobs each month.

Layoffs on roll

Even if we keep aside the heavy layoffs by Myspace, many other big players are following the suit. Despite earning decent profits, the companies are unable to retain their employees and overall management structure.

Recently, Cisco Systems has unveiled its plans of major layoffs to attain the goal of slashing costs by $1 billion. It is estimated that world's largest maker of network equipment will axe up to 4,000 jobs in coming months.
Even the big players like RIM, has announced a “headcount reduction” to realign the cost structure. The BlackBerry maker has slashed its earnings and revenue outlook for the fiscal year. According to RIM, it has taken this step to focus on the core areas with high growth opportunities.

The Finnish cell phone maker, Nokia has recently announced a employee base re-alignment in which it plans to reduce its headcount by 4000.

Panasonic too after reporting loss is going for major job cuts nearly 17,000 in over two years.

While virtually all the economists are estimating stronger growth in the second half of the year, they've reduced their forecast for full-year GDP growth.

Nokia has lowered Devices & Services second quarter 2011 outlook

Hope of recovery

Although, many tech companies are going for layoffs, others who are aggressively looking for skilled talent.

In fact, many Indian IT companies including Infosys, TCS, Wipro are back on hiring track and looking for some serious talent through campus hiring et al.

Therefore, turnaround is clearly visible in the IT sector.

Many tech majors are eying mergers and acquisitions to stave off a credit crunch. Many companies like Microsoft and Cisco are also restructuring their management to turn around the fortunes.
Out of the entire tech universe, one company that has stayed relevant even in this gloomy outlook is Apple. Oracle too has emerged out as a dark horse in this industry slowdown.

Technology business needs to move towards a recovery path if they want to revive themselves.

Posted in: Internet