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May 5, 2004
After a deep three-year slump that erased more than 1 million jobs, U.S. technology companies have begun hiring again, marking a so far modest but solid trend that could well brighten the country's economic outlook.
The gains to date are tiny - fewer than 20,000 jobs since late last year - and concentrated among smaller companies. Tech-job seekers still must fight strong headwinds, from continuing layoffs to outsourcing of jobs abroad. Executives remain cautious after the long downturn, and job gains could quickly evaporate if sales slip. Yet even the small increases herald a significant shift.
For the first time in several years, more workers are being hired than are being fired. Executives, recruiters and job applicants say the pace of hiring has picked up significantly this year. Companies are again raising salaries. Job applicants tell of competing offers. Even those still out of work say they sense improved prospects.
National Semiconductor Corp., of Santa Clara, Calif., is adding shifts at chip factories in Maine and Texas to meet surging demand. EMC Corp., a Hopkinton, Mass., maker of data-storage devices, added more than 300 engineering and sales jobs in the first quarter, about half of them in the U.S. Software giant Microsoft Corp. says it is on track with previously announced plans to add 5,000 employees in the fiscal year ending June 30, including 3,500 in the United States.
"It's just infinitely more activity," says Mike Hanna, a San Rafael, Calif., recruiter for salespeople, primarily for software companies. Since the start of the year, Hanna, who typically works by himself, has hired two recruiters to handle the increased workload. Software executives "are more optimistic about where the business is going," he said.
Diane Brown is benefiting from the optimism. Brown says she was "quite nervous" when she learned in March that she would be laid off from her job as a vice president in a Kansas City-based unit of Marconi PLC, a British maker of telecommunications equipment. Brown, 49 years old, worried about her age and the job market.
Before she cleaned out her desk at Marconi, however, a former colleague put her in contact with a recruiter for Qpass Inc., a Seattle company writing software that allows users to download games and messages onto cell phones. Qpass had ridden both sides of the Internet bubble, raising $90 million from private investors in the late 1990s and swelling to 200 employees, before laying off 75 percent of its work force. Now, Qpass is growing again, as cell-phone operators encourage users to do more with their phones. The company added 70 employees last year and plans to add about 30 more this year.
Brown starts work next week as Qpass' director of customer service. Her first task: Find additional employees to expand the 15-person department.
Economists say small companies such as Qpass will be the source of most new tech jobs. "New jobs here have to come from (companies backed by) venture capital," says Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto.
And venture-capital firms are stepping up their activity, after their own slump. Investments in venture-backed companies are up 29 percent so far this year, to $8 billion, compared with the same period last year, according to Dow Jones Venturewire. Levy says it usually takes start-ups six months after they receive funding to hire additional workers. That makes Levy "hopeful" that tech employment will increase further next year. "It's unlikely we'll see a significant surge this year, but up is better than down," he says.
Most tech firms are enjoying solid revenue and profit growth, and beginning to hire, or at least to think about hiring. First-quarter operating profits at 46 large tech companies tracked by Merrill Lynch rose 61 percent from the same period last year. Revenue at those firms rose 15.5 percent.
The result: After eliminating more than 538,000 jobs in the course of three years, makers of computer hardware and components added 2,000 jobs between December and March, according to the U.S. Bureau of Labor Statistics. Computer-system-design companies added 14,400 since last July. And Internet publishers, who eliminated more than two out of five jobs in the infant industry after the dot-com bust, have added 2,700 jobs since last May, a 9-percent increase.
Although the gains are small so far, economists are impressed by the way that each tech sector seems to be rebounding at the same time. Moreover, Mark Zandi, chief economist at Economy.com, an economic-research firm in West Chester, Pa., says the job-growth statistics may be understated because the government survey tends to miss many small, growing firms.
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