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Technology Local firm’s projections fall flat with layoffs



Former Startup of the Year Sought to Add 75 Employees, Expand Operations in Asia

Less than a month ago, eAssist Global Solutions, Inc., a San Diego provider of customer service software, was looking toward a successful year of increased sales, adding employees, opening new offices and reaching profitability.

Last week, the privately held company announced a restructuring, cutting 68 employees, including 50 in its local Sorrento Valley office.

The layoffs were necessary because of a slowing economy that caused the company “to slow our growth rate to refocus our resources and manage our assets appropriately,” said spokeswoman Diane Morgan.

A phone call requesting CEO Dan Plashkes to provide a more detailed explanation wasn’t returned.

The job cuts were made across the board and affected every department. Following the layoffs, eAssist has about 200 employees, including 125 in its headquarters office, Morgan said.

The workers were provided a severance package consistent with standards in the industry, which takes seniority into account, she said.

Layoffs in the high-tech industry aren’t that unusual in recent months as firms in a variety of high-tech sectors retrench operations in the face of noticeable reduced sales.

What is unusual is the sudden shift by a company that recently was featured as an example of a stable, fast-growing enterprise.

In a story in the Feb. 19 San Diego Business Journal, Plashkes said his company planned to add 75 new employees by the end of the year, report higher-than-last-year sales of $7 million, and open an Asian sales office in either Hong Kong or Singapore in the near future.

“We’ve had the proper management from the day we started the company, and there is a large market demand for what we do,” Plashkes said. “I think we have a chance for being one of the great companies of San Diego.” Indeed, in December the San Diego Software and Internet Council gave eAssist Global Solutions its Startup of the Year award for 2000. Among the reasons for the recognition was the company’s explosive growth, expanding its work force by about 300 employees in 18 months, and the amount of venture capital investment it attracted.

“We still think it’s a good company and has a good future,” said Bob Slapin, executive director of the San Diego Software and Internet Council. “When you have rapid growth like that, sometimes you grow too fast.”

Since its incorporation in 1999, eAssist has had three financing rounds, bringing total investment into the company to $72 million, Morgan said.

The firm counts some heavy hitters among its customers, including British Telecom, Bank of America, Scudder Capital, and VeriSign.

EAssist is in the relatively new space known as customer relationship management, providing systems that allow companies to better connect with their customers.

“It’s the new buzzword for technology systems that allow companies to manage, maintain and communicate with a large customer network through the Internet and human voice,” said Bruce Ahern, a San Diego-based high-tech analyst.

Ahern said it’s not all that unusual for smaller start-ups to make drastic personnel decisions if one of their big customers pulls back from an anticipated purchase.

“I’ve seen it happen many times. Companies have pre-booked a soft sale, and if that sale falls apart because the customer is forced to cut costs, then the company is left holding the bag,” Ahern said. “Obviously somebody pulled the plug on a large deal.”

Kevin Carroll, executive director for AeA, the trade association for the electronics industry, was surprised to hear about the layoff but said the San Diego high-tech sector remains healthy and continues to show resiliency.

“Those people (who were laid off) will get absorbed very quickly in this economy,” Carroll said. “This a bump in the road, and there will always be bumps along the road.”

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