The computer industry has announced more job cuts so far in 2014 than any other sector, according to data from an outplacement firm, which reported layoffs in that pocket of the economy have swelled above 48,000.
The 48,361 job cuts that computer firms have announced through July of this year is 85% higher than the retail industry, which ranked second, according to a report by Challenger, Gray & Christmas. The weakness was led by Microsoft’s (MSFT) plan to slash 18,000 jobs over the next year and Hewlett-Packard’s (HPQ) decision earlier this year to cut as much as 16,000 more jobs after previously unveiling a plan to layoff 34,000.
Both Microsoft and H-P face challenges in a world that lives by mobile devices rather than the PCs where those companies have traditionally dominated. Consumers and businesses are shifting more computing chores to the Web, tablets and smartphones — areas where Microsoft and H-P have struggled to gain meaningful traction.
“Both companies were slow to react to the shift from PCs to mobile and simply do not want to get caught flat-footed again,” said John A. Challenger, CEO of Challenger, Gray & Christmas. He added the companies had to “flatten the bureaucracy and foster a more entrepreneurial approach to decision making.”
For July, job cuts reached the second highest level of the year, climbing 49% from June’s total — mostly due to Microsoft’s announcement. Microsoft’s job cuts is the largest the company has ever announced, and is also the largest layoffs planned by any company in the U.S. this year, the outplacement firm reported.
Despite the weakness in the computer industry, the economy overall continues to add more jobs than it sheds. Private-sector payrolls in the U.S. reportedly climbed by 218,000 in July, the fourth-straight month of 200,000-plus job gains. Meanwhile, the unemployment rate has steadily ticked lower since the 2008-2009 financial crisis.