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Alorie Gilbert

Staff Writer, CNET

Technology companies let up on the layoffs in the United States last year, sending out 23 percent fewer pink slips than in 2003 and 62 percent fewer than in 2002, according to a new report.

Yet employment in the high-tech industry, which encompasses computer, electronics, telecommunications and e-commerce companies, is still in flux, according to employment services firm Challenger, Gray & Christmas. Job losses in the industry totaled 176,113 and accounted for 17 percent of all job cuts in 2004, the company reported on Wednesday.

“The fact is, the technology sector is very volatile,” the firm’s CEO, John Challenger, said in a statement. “Even at its strongest, we are going to see a lot of job churn due to factors such as outsourcing, automation, mergers and acquisitions and fluctuation in demand.”

Telecommunications workers were hit the hardest in 2004, absorbing 56 percent of the industry’s layoffs, followed by those that make, program and service computers, which accounted for nearly a third of the cuts.

As is typical, layoffs accelerated at the end of the year, with nearly a third of the year’s cuts coming in the fourth quarter, according to the report.

More than 1.5 million jobs have been lost in the industry since 2001, the report noted.

Though the industry is clearly on the road to recovery, rough times still lay ahead, Challenger said. About 6,000 PeopleSoft employees are expected to lose their jobs following Oracle’s acquisition of the company. Challenger said Sprint’s proposed marriage to Nextel would also result in waves of pink slips. Additionally, jobs continue to trickle overseas as companies hire more overseas staff to do high-tech work previously done in the United States.

But the firm’s outlook isn’t entirely gloomy.

“The good news is that technology is such an integral part of our society and economy that there will always be new and expanding opportunities for employment,” he said.