The Roundup: Staff Cuts Continue in the Tech Sector

By David Aponovich

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IDC Says KM Catching On

Knowledge management, the New Economy term for capturing and sharing intellectual capital within an enterprise, is gaining momentum.

According to a new report from IDC, spending on knowledge management (KM) software and services are predicted to post a compound annual growth rate of 41% annually between now and 2005, when spending will exceed $12 billion annually, up from $2.3 billion in 2000.

The growth comes as "companies turn their focus away from technology issues toward issues involving people and processes." Vendors will capitalize on this by developing and applying KM solutions for specific business problems, such as employee retention, and make KM a "value adding" tool, according to IDC.

The KM market is biggest in the U.S., however its share of worldwide KM spending will dip to 48% in 2005, from 62% in 1999, as KM spreads to other regions.

Aberdeen Forecasts IT Spending Growth

In the midst of a global slowdown in IT spending, Aberdeen Group puts a positive spin on the trend, forecasting "robust" spending through 2005, when the market will be valued at $1.75 trillion.

The Boston-based consulting firm says despite regional fluctuations, IT spending on hardware, software and services is forecasted to grow at a compounded annual growth rate of 9.6%. In North America, the worlds largest market for IT products and services, spending will growth at a rate of 8.5% between 2001 and 2002.

"Despite short-term fluctuations in major markets, global technology spending will continue to be robust, buttressed by strong demand in Western Europe, North America, and Asia," said David Wright, vice president of Aberdeen's Private Equity Services division. "Spending on Internet-infrastructure-related projects in the U.S., Western European, and Asian markets remains healthy. Moreover, recent traction experienced in customer support and sales force automation segments will continue to be positive in the world's top tier markets as organizations experience positive short-term return on investment."

The strongest IT growth potential is seen in emerging markets in Latin America, Asia, the Middle East and Africa, Aberdeen says. But the biggest spending will continue to take place in North America, Western Europe and Japan.

Tech firms still trimming staff

After months of drastic job cuts among U.S. companies, the trend is slowing down. Layoffs of U.S. workers tumbled 52% in May to 80,140 after hitting their highest monthly count in eight years in April (165,564), according to the outplacement firm of Challenger, Gray & Christmas, which was quoted this week in press reports. That decline in job cuts doesn't mean the job market is stabilizing, however.

The technology industry (telecommunications, computers, electronics and e-commerce were the four worst sectors) had the most layoffs last month. Tech firms in the U.S. have cut nearly 103,000 workers this year. The automotive industry has cut more than 83,000 jobs. In all, U.S. corporations have laid off more than 650,000 workers this year (compared to more than 613,000 in 2000).

Hardest hit has been California, where employers have cut more than 106,000 workers this year, following a year in which the state's employers cut about 42,000 workers.

Internet Profits -- Not an Oxymoron

From internet.com's Ecommerce-guide.com:

Some good news for a change: a new study finds that more than half of the Web sites that are trying to make money actually have.

Proving that the words "Internet" and "profits" can be used in the same sentence, a new industry study finds that more than half of all profit-seeking Web sites are actually already profitable.

The research, conducted this spring among 500 executives and business managers at Web sites around the world, found a far better picture of online success than is generally recognized, according to the report's author, New Hampshire-based ActivMedia Research.

Among Web executives at sites that are wholly or partially profit-seeking, 54% stated that their online businesses already are making money. Another 28% said they expect to become profitable before 2001 is over.