Downsizing and its

Alternatives
Presented By :
Gaurav Jaiswal
Roma Kanuga
Smrity Mishra
Stuti Upadhyay
Supriyo Das

Agenda
What
Why

is downsizing?

do organizations downsize

Examples

of downsizing

Downsizing at Flipkart

Downsizing at CISCO

Alternatives

of Downsizing

What is downsizing?

Reduction in organizational size and operating costs by management in order

to improve organizational efficiency, productivity and/or the competitiveness
of the organization.

A downsizing strategy improves the financial performance of a company.

Why do organizations downsize?

Merging of Two or More Firms

In case of a merger, certain positions become redundant. In such a

company cuts staff to eliminate redundancy in work.

case, the

Acquisition

If one organization acquires another, there is a definite change in the management,

and the staff of the acquired company has to face the prospect of unemployment.

Change in Management

A change in the top brass of a company can also result in downsizing due to change in
working methods and procedures that may vary with different management teams.

Why do organizations downsize? (Contd.)

Economic Crisis

This is one of the most important reason of downsizing. Due to recession company usually starts
downsizing.

Strategy Changes

Some companies may reduce certain areas of operation and focus on other areas due to which
the company may start downsizing.

Outsourcing

Organizations catering to international markets require a huge and efficient employee base. If
this labor can be obtained by 'exporting' the job to other countries, a huge downsizing takes
place in the parent country.

Why do organizations downsize? (Contd.)

Technological advancement

Due to obsolescence in technology, company advances its technology regularly

because of which workforce requirements is reduced.

Poor employee performance

If the employee performance is not as required by the organization it may

implement downsizing.

Alternatives of downsizing

Hiring link to vision

The organization identifies what skills it will need in order to meet its vision and goals. This
strategy helps assure that organizations are recruiting and hiring people who can meet future
challenges.

Cross training

By understanding the skill mix of staff today and linking it to the anticipated skills needed in the
future, the organisation allows individual employees to determine what they need to do in order
to remain gainfully employed

Succession planning

The HR department ought to work with line managers to identify likely candidates so that they
can begin preparing them for positions once they become vacant

(Contd.)

Lower wages

This is usually a temporary program instituted to get through a downturn or until

other reductions such as attrition can take place.

Voluntary Retirement Scheme

Also known as Golden Handshake is a strategy in which employee is offered

retirement before is retirement date.

Alternative Placements

The organization makes arrangements with similar institutions or suppliers for

placement.

(Contd.)

Leave of absence

People are offered a leave of absence with full benefits for a specified period of time to
help an organization to weather a downturn.

Reduced working hours

A policy is established that either places everyone in a particular job category on

a flexible working arrangement or creates a flex-pool made up of volunteers
from the department.

Downsizing in Flipkart

With a staff of 30000 people , Flipkart has one of the largest workforce among Indian ecommerce companies.

It has been criticised for over-hiring and locking in top talent.

Flipkart is downsizing its workforce, to cut costs and better compete with global rival
Amazon.

This move will affect

700 to 1000 staffers

or 3.3% of its workforce.

Downsizing in Flipkart (contd.)

In may 2016, Flipkart postponed the placement of fresh recruiters from top
Indian colleges by nearly six months.

Flipkart , which has come under the thought of investors for burning cash, is
trying to find a balance between growth and profitability .

The company made several changes recently , including increasing margins it

charges from sellers .

Downsizing in CISCO

THE NETWORK GIANT Cisco announced in August that

It will reduce up to 5500 employees which is about 7 % of its global

workforce

(Starting in the first quarter of 2017)

The company expects to reinvest the cost savings from its restructuring
plan to key priority areas such as

Security

Collaboration

Next generation data center and cloud