It took longer for the slowing global economy to be felt by technology firms in Silicon Valley than it took for the impact to be felt elsewhere in the tech world. However, when the recession finally made its way to Silicon Valley, it hit many firms very hard.
DailyTech wrote that Silicon Valley first felt the economic pinch of the recession in December 2008. Reuters reports that layoffs are now mounting as many technology firms in Silicon Valley rush to strengthen their positions by reducing expenses and cutting jobs.
Silicon Valley lost 11,700 jobs last year reports Reuters, and that number is only the beginning according to analysts. Adam Charlson, senior partner at executive search firm Korn/Ferry International said, "Organizations are saying, 'What is the absolute nuclear winter? Let's plan for that.' What you're seeing now is organizations putting those plans into reality."
The loss of 11,700 jobs lost looks like a big number, but that is a mere drop in the bucket compared to the layoffs that gripped the area after the dotcom burst in 2000. Steven Levy from the Center for Continuing Study of the California Economy said that the 11,700 figure doesn’t reflect recent layoffs.
Levy told Reuters, "The headline is that the recession has hit Silicon Valley," Levy said. As a result, he said he was "substantially revising downward" employment predictions for 2009.
The jobless rate in California was at a 14-year high of 9.3 percent in December, the national average unemployment rate at the time was 7.2 percent. Some analysts see the layoffs going around the Valley as preemptive measures by firms that were too slow in cutting jobs during the last recession. Andy Miedler, a senior analyst at Edward Jones said, "Layoffs and cost-cutting are unfortunate, but companies have to make tough decisions in a rough economy to preserve their own financial position."
In 2000, many of the technology firms didn’t survive the recession that plagued Silicon Valley, this time companies are preparing for a worsening economy early. Reuters points out that layoffs in the tech hub may not be as horrible as they seem at first glance.
Engineers and researchers who have been let go from firms may decide to go to work on projects of their own, which could lead to a new round of innovation. Another bright spot in the tech industry is the so-called "cleantech" arena.
The engineers and researchers leaving technology firms may be able to find work with cleantech firms. Cleantech is widely predicted to continue to grow and offer jobs.
Out of work employees may be able to find jobs, but many of the start-up firms that are powered by venture capital may find that they can no longer survive. Reuters reports that venture capital funding fell 71 percent in Q4 2008 compared to the previous year.
These new start-ups that often provide software and services to the larger Silicon Valley firms could find that as these big companies reduce spending there is simply no alternative for fledgling companies to consider other than closing their doors.
quote: The ill conceived solution from Congress and the President is THROW MONEY AT THE PROBLEM to the tune of a Trillion dollars for Pork and Welfare jobs that will do little to help and more likely will drive us into a decade long depression.
quote: I just wish the Bush administration had toned down the religious crap and also came clean about Iraq and just said we want to secure our future oil supplies, and there isn't a damn thing you can do about it. I wouldn't be this much against the war then.
quote: I love America (I emigrated from Europe) because it's not Europe. T he American lifestyle of having big cars and houses is much better than living in a box and driving a 3 cylinder turbodiesel compact car, I know because that's what I had there.
quote: There are some quite cool econoboxes that I wouldn't mind owning, like a mini cooper S. But what I don't like is being FORCED into buying those because taxes and petrol is so expensive that only the wealthy can afford big cars with big engines that use lots of gas. USA is great because even the middle class can afford a lifestyle that is restricted to the more wealthy in europe. They don't call it the american dream for nothing. A dream can only become reality if there aren't any communists or eco-terrorists blocking the way.
quote: In 2000, many of the technology firms didn’t survive the recession that plagued Silicon Valley, this time companies are preparing for a worsening economy early. Reuters points out that layoffs in the tech hub may not be as horrible as they seem at first glance.
quote: All through Clinton's years we avg'd about 6% and Bush Sr. was just under 6%. Reagan? near 7%...about same with Carter
quote: Step 1 to fixing this: Quit with the friggin finger pointing
quote: if everybody did that the news would get cut just as any program with failing ratings would be cut, or forced to change.
quote: I agree, finger pointing never solved anything.
quote: Too much time is wasted trying to argue about whether this is the fault of the liberals or conservatives.
quote: The whole country could really make do with California's "problems".
quote: You do realize that California has higher income and contributes more to the GDP than the national average right? The whole country could really make do with California's "problems".