Downsizing | Meaning and Definition

What is downsizing?

Downsizing meaning is the permanent growth of the workforce of a company by eliminating ineffective departments and employees. It is a corporate activity that is the result of struggling firms and economic downturns. The downsizing of a complete division, branch, or store many times leads to the properties being left and free for sale during the process among the corporate organizations. 

What can lead to a company’s downsizing?

  • The first and foremost thing a company looks for is profit. To maintain and retain its profitably, a company is often compelled to practice the process of downsizing.

  • Sometimes it is seen that downsizing results from a company buying another or two companies merging to become one. On the other hand, if that company is yet to merge or buy another one, it could follow downsizing to be seen as a more profitable candidate.

  • In bad times, it is seen that a company’s market suffers from a recession due to issues such as technology, for which it downsizes to cut the extra cost.

  • On a positive note, several companies reorganize and restructure themselves through downsizing to streamline themselves to increase performance and productivity.