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Economic Slowdown Hits Hard At Analyst Firms

The economic downturn is taking a toll on analyst firms. Forrester Research cut 111 jobs because of slowing demand. Gartner this year has laid off more than 300 people.
The economic downturn is taking a toll on analyst firms. In July, Forrester Research cut 111 jobs, or 15% of its workforce, because of slowing demand. Gartner this year has laid off more than 300 people, 8% of its workforce. Neither company will say how many of those were analysts, though Meta Group says that only one or two analysts were affected when it laid off 100 people in April. International Data Corp. laid off many of its Internet commerce analysts this year.

The news has been even worse for other analyst firms. Jupiter Media Metrix, which focuses on Internet strategies, laid off 18% of its staff in April, reported a loss of $10.1 million for the second quarter, and had to take a $25 million loan to remain afloat while it searches for permanent funding. Jupiter chairman Tod Johnson blames the financial woes on tighter IT budgets and the failures of dot-coms. Giga Information Group was delisted from Nasdaq in March after its stock dropped to junk status following a lengthy string of losing quarters. Millward Brown Interactive shuttered Internet analyst Zona Research in July to avoid financial exposure in the troubled IT sector, though Zona executive VP Harry Fenik says the firm was on sound financial ground when the move was made. Zona hopes to be reborn this month as the Sageza Group.

But some analyst firms, such as AMR Research, Forrester, Gartner, and Giga, each enjoy the confidence of more than 40% of the respondents that use those firms; they say their services are highly valuable.

For Ryder System Inc., analysts' value comes in helping a company determine how to get to where it wants to go with technology, says supply-chain guru Gene Tyndall. Ryder spends about $1 million of its $150 million annual IT budget on research with AMR, Forrester, and Gartner. Ryder's closest relationship is with two of Forrester's E-business specialists. They've spent a lot of time at Ryder, brainstorming about how to move more of its operation onto the Web, says Sandy Orr, Ryder's VP of E-commerce solutions: "We have stayed with Forrester because they know how to help us."