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Related to downsizing: outsourcing, Rightsizing


A company's reduction in the number of employees, number of bureaucratic levels, and overall size in an attempt to increase efficiency and profitability.


To reduce the size of a company. A company downsizes when its operations are perceived to become inefficient and it wishes to concentrate on certain competencies in order to improve profitability and reduce expenses. Downsizing often reduces the number of jobs at the company. Because downsizing reduces expenses, it often increases the company's value and/or dividends for shareholders.


  1. the use of PERSONAL COMPUTERS in a business in place of large mainframe computers. The introduction of smaller, faster and more cost-effective microprocessors has made it possible for tasks which formerly could only be performed by mainframe computers to be carried out at the personal workstation level, allowing a greater devolution of DATA PROCESSING down to the ‘desk top’.
  2. a term for policies aimed at organizational contraction, usually leading to REDUNDANCY for some employees. The oft-stated rationale for downsizing is that a smaller, more flexible ORGANIZATION will be able to respond better to market forces. Cost reduction, however, is probably an equally important motive. See DELAYERING, RIGHTSIZING.


a term used to describe the contraction of a firm's operations to make it ‘leaner and fitter’. The general aim of downsizing is to reduce costs and, by creating a smaller, more flexible organization, make the firm better able to respond quickly to changes in its markets. Downsizing frequently occurs during periods of falling demand or intense competition, and it often involves redundancies or earlier retirements among the workforce. Downsizing may also result from productivity improvements associated with technological changes that enable firms to produce the same or greater outputs with fewer employees.
References in periodicals archive ?
To expand our knowledge about the public sector downsizing experience, we studied downsizing not from the traditional, narrow meaning of reduction in workforce, but from a broad perspective of organizational changes to improve organizational performance.
We selected the three areas of downsizing reforms based on the following concerns.
Thus, Psychological Contract Theory posits that individual outcomes associated with organizational downsizing can have a direct effect on a company's overall performance and financial success.
The other theoretical approach examines the impact of organizational downsizing from an economic or macro perspective.
To ensure that downsizing creates long-term value, organizations need to make changes that will maintain employees' creativity.
Therefore, I also investigated the moderating effects of challenging work and workload pressure on the relationship between opportunity/threat perception after downsizing and employees' creativity.
So from time to time, a lot of organizational changes in the form of downsizing, amalgamation, privatization and even disbandment have been observed.
Kozlowsky, Chao, Smith, and Hudland (1993) declared downsizing a deliberate organizational design which reduces the manpower and is planned to improve organizational performance.
Most definitions of the phenomenon of downsizing assume it is applied as a measure to improve an organization's results (Freeman and Cameron, 1993; Cameron, 1994; McKinley et al.
Other studies have shown that reduced productivity following downsizing may be counterbalanced by savings in personnel costs (Baumol et al.
A company that is part of the 1988 S & P 500 will be included, provided they have a downsizing action, regardless of their membership from 1990 to 1992.
Most downsizings are done surreptitiously, in the hopes that consumers won't notice.