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Tech Layoffs 2016: Job Loss Figures on the Rise

When Symantec announced plans for 1,200 layoffs yesterday, it was the latest in a growing list of technology industry job cuts for 2016. The sky certainly isn’t falling. But there are some storm clouds on the horizon for certain technology industry workers and channel partners. The big question: Will job cuts impact channel partner program commitments? Hmmm…

First, the facts. Technology industry companies that have confirmed layoffs so far in 2016 include:

  • Automatic: IoT company cuts 28% of staff.
  • Cisco Systems: 5,500 job cuts between July and September 2016 (which is Q1 fiscal 2017 for Cisco).
  • EMC: Exact layoff figures weren’t disclosed.
  • HP Inc.: About 3,000 job cuts.
  • IBM: Exact layoff figures weren’t disclosed.
  • Intel: About, 12,000 job cuts.
  • NetApp: Cutting about 365 jobs.
  • Symantec: About 1,200 layoffs.
  • Veritas: Exact layoff figures weren’t disclosed.
  • VMware: About 800 job cuts.
  • Silicon Valley Startups: Some of them are making cuts, too.
  • Autodesk and Toshiba America also have made some targeted job cuts.

Take a closer look at the list, and most of the companies are hardware industry veterans that are striving to transform for the cloud, big data and mobility age. But even software companies have struggled a bit. Symantec largely missed the huge cloud security and storage opportunity — though the company is adjusting now. And VMware’s own public cloud efforts stumbled, though the company is  regaining momentum thanks to software-defined networking (NSX) and software-defined storage (vSAN).

Silicon Valley Layoffs, Job Cuts 2016

The overall Bay Area (Santa Clara, San Mateo, Alameda and San Francisco counties) saw tech layoffs more than double in the first four months of 2016 vs. the corresponding period of 2015, according to The San Jose Mercury News.

Roughly 3,135 Bay Area tech jobs were lost during the period in 2016, vs. 1,515 and 1,330 in the corresponding periods for 2015 and 2014, the newspaper reported.

Unicorn valuations — startups valued at $1 billion or more — also have suffered as venture capitalists and angel investors rethink their investment habits.

Don’t Panic; Do Prepare

What’s my reaction? I’m not ready to press a panic button. Nor am I suggesting the tech industry is preparing for a meltdown.

Unlike the dot-com implosion (2000 to 2002), many of today’s technology and cloud giants are very profitable. But channel partners would be wise to watch technology earnings closely. Many of those earnings statements specifically mention shifting sales models — toward the channel… or away from it.

When earnings stumble some CXOs panic and start shaking up their sales models. Some may flip-flop on their channel commitments, taking certain business engagements direct.

Consider the long-term history of your technology partners. Did any of them abandon the channel before and start selling direct — even more aggressively — during a business downturn? Which ones — and why?

In some cases, I suspect history may be about to repeat itself…

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2 Comments

Comments

    Larry Walsh:

    At 2112, we’re seeing the same trend. Some vendors are cutting channel funding and retrenching on internal resources as cost-saving measures. We’re advising vendors to avoid this mistake and double-down on partners, as resellers and partners can continue to carry the vendor flag with higher returns and lower costs than going direct. This is our analysis.

      Joe Panettieri:

      Hey Larry: I haven’t seen the channel cutbacks first hand. But we’ll be watching for them and tracking your analysis as well. Thanks for sharing the link with our readers. Good stuff.

      Best,
      -jp

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