Bleak job outlook for telecom industry

Despite the economy downturn, a recent ITAA study suggests that the overall IT job market is holding up fairly well, with one exception: the telecom industry. Bob Weinstein's Tech Watch paints a dark picture of this industry's future.

Plagued by bankruptcies and layoffs, Wall Street has turned its back on the once-hot telecom industry that was growing aggressively a year ago. Telecom analysts say the industry is overextended, with too many competing companies laying too much cable. The shakeout has been a long time coming. Sound the death knell for the telecom industry—at least for the next year.

It’s hard to ignore facts like these:
  • 3Com has planned more layoffs and has announced a quarterly loss. (The company has already laid off 1,200 people.)
  • Teligent laid off 900 employees, representing 38 percent of its telecommunications workforce—its third round of job cuts in six months. Rumors abound that the company will file for bankruptcy.
  • WorldCom cut about 6,000 employees across every business unit—the first layoffs in the company's history.
  • Nortel Networks Limited shrunk payroll through attrition and by cutting 10,000 jobs.
  • Lucent cut 10,000 people.

The layoff picture is equally severe at small companies. Many start-ups are bowing out of the race only months after they launched.

The Wall Street Journalrecently reported that “U.S. telecom companies, which have gorged on some $650 billion in debt, are failing in record numbers for that industry. It's shaping up to be one of the biggest financial fiascoes ever.”

If you look back at November 2000, you would see a totally different picture. A South Florida daily newspaper painted a booming future for the telecom industry. Telecommunications equipment designer Siemens AG boasted 300 openings in Boca Raton, FL, alone, and 1,000 throughout the state.

Fast-forward to the present: Siemens AG Spokesperson Reiner Schoenrock recently said the company is virtually not hiring. In classic corporate doublespeak, he said the 300 Boca Raton openings had been “reduced.” “They’re open positions which had been budgeted,” Schoenrock explains. In plain English, the company isn’t hiring.

The deregulation bubble
The deregulation of the telecommunications industry by the Telecommunications Act of 1996 spawned a booming industry that grew so rapidly it eventually strangled itself. IT recruiter Ilya Talman, president of Roy Talman & Associates in Chicago, said the big telecom companies in Illinois are retrenching. And veteran techies, who would have received three job offers within a week last year, are now pounding the pavement for two months or more before landing a position. “Many engineers and programmers are relocating to other cities because their job prospects are dismal,” says Talman. The problem is most of the laid-off techies have “telecom-specific” skills, which hinders their prospects of getting jobs, according to Talman. “Their knowledge is also dated, which makes it hard for them to compete with candidates who are current with the newest technology,” he adds.

Yet, Hilary Mine, executive vice president at Probe Research, Inc., a telecommunications research firm in Cedar Knolls, NJ, offers a conflicting picture of job prospects in the shrinking telecom industry. Despite sweeping layoffs throughout the United States, Mine says the press has overexaggerated the telecommunications picture. “[The press] failed to mention that big companies have been laying off people for years,” she says. “Generally, you’re not seeing massive layoffs in the traditional companies. Most of them are in the new ones that attracted huge venture-capital investments.”

Telecom companies are still hiring, but they’re doing it more selectively. “If you’re talented, you’ll find a job,” says Mine.

Dennis McColl, director of business development at Management Recruiters of Indianapolis-North, agrees. Despite layoffs, “key jobs are still available,” he says. “The companies feeling the biggest pinch are the local ISPs [Internet service providers]. Large companies, particularly the Bell regional operating companies, are still hiring technical people and top management.”

Bottom line
So what gives? I disagree with Mine and McColl. You can’t argue with numbers. Talman presents a more realistic picture of the telecom industry, which some analysts say won’t fully recover for three or four years. The important questions are: What’s next, and what can we learn from this industry’s massive shakeout? For the next year or so, the telecom industry will hire prudently and demand advanced technical skills. “Companies will restructure themselves, so they’re redefining their business practices and spending prudently,” McColl projects.

What’s ahead? No one knows for sure. But this is the time to tune in, track the survivors, and study the telecom market as it redefines itself so you can be part of a revitalized industry.

Survival of the fittest?
Do you have any tips on how to survive in the down telecom market? Post a comment below and share your ideas and experiences.


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