The tech industry is red hot.
So can you guess which industry had more layoffs in 2014 than any other?
The computer industry.
That’s right: According to job placement firm Challenger, Grey and Christmas, the computer industry cut 59,528 jobs last year. That’s up 69% from 32,136 job cuts in 2013, and it’s way ahead of the No. 2 worst-performing sector, retail, where 43,783 jobs were cut in 2014.
The firm notes that the tech industry is overall very strong, and “enjoying the fruits of expansion.”
So what gives?
Most of the job cuts came from big old tech companies like Hewlett-Packard and Microsoft, says the firm.
These companies are in a classic innovator’s dilemma. The products that have sustained them for years still provide good margins and, often, some growth. So they can’t abandon those businesses entirely. But newer technologies are gradually replacing those core businesses — in particular, the move to cloud computing (where companies outsource a lot of their computing infrastructure) has hurt HP’s data center business, and the rise of smartphones and tablets have hurt both HP’s PC business and Microsoft’s Windows business.
Meanwhile, newer companies that don’t have these kinds of legacy tech have nothing holding them back from going where customers want to be now. That’s how Amazon has become the top cloud infrastructure provider, and how Salesforce has grown into a $US5 billion-a-year company.
Microsoft, HP, and other big old companies like IBM are trying to adapt, with mixed success. But it takes time. In the meantime, some people lose their jobs.
So remember: whenever you hear a tech entrepreneur or investor talk about disruption, somebody else’s business is being disrupted.
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