Definition of Downsizing

What does the term "downsizing" mean? What is meant by the term "downsizing"?

As you may have guessed, "downsizing" occurs when you shrink the size of something.

As it applies to the world of business, "downsizing" occurs when a business cuts jobs in an attempt to lower their expenses.

For instance - company XYZ has had a couple of rough years due to a weak economy, so they announce that they are "downsizing" and cutting a total of 4,500 jobs. Since revenues are down, XYZ feels that they are justified in cutting jobs in an effort to bring their expenses in line.

Over the last few years, we've seen plenty of companies downsizing due to the rough economy. In a normal economic cycle, companies cut jobs when the economy is in recession mode and adds jobs when the economy is growing. The period from 2008-2012 has been particularly bad, which has resulted in many companies becoming cautious about adding new employees.

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