An empirical study on effects of downsizing on private firms

Abstract

Many organizations may reduce on the number of their employees in an attempt to reduce their operating cost and increase efficiency of their units. The workers who normally leave the firms are not believed to be productive for other organizations. On the other hands, there are some side effects on the remaining workers since they may feel they are losing their job securities. As a result, they may have mistrust towards their managers and start working less to pretend that downsizing yields negative consequences. In this paper, we survey on some information technology based organizations where such downsizing incidents have already occurred and analyze whether downsizing could reach its mission, properly or not. The results of this survey indicate that although downsizing can reduce the operating cost, it has some negative impacts on workers as well.

Keywords

• Downsizing
• Productivity
• Cost reduction
• Information Technology