1. #1
    Unregistered

    Why is cost cutting done by downsizing the employees? Is there any other better option than this?

    At the time recession most of the time the companies do cost cutting through downsizing. And their prey will be either newly joined employees or who are working on contract basis. Why is cost cutting done by downsizing the employees? Is there any other better option than this?

  2. #2
    sdeb Array
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    Sep 2012
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    Re: Why is cost cutting done by downsizing the employees? Is there any other better option than this?

    Hi Friend,
    When recession comes companies will be badly affected to meet there quarters revenues. As there will not be much projects that time they will not be able to show their resource utilisation. As most of the project works on time and material basis, if the resource is not billable it will be tough for employer to justify and that will have heavy impact on the revenue. To meet this challenge immediate action is downsizing the redundant resources, under-performers,contract employees and sometime freshers as there will not be much project for them at that point in time.

    There are other option of cost cutting like travel allowance, claim benefits can be reduced, employees will be asked to take vacation leave (if vacation leave is left company needs to pay back) so that company will get benefit.

    But for a service industry easiest way is to downsize redundant resources to meet their revenue during recession.

  3. #3
    deepsikha03 Array
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    Re: Why is cost cutting done by downsizing the employees? Is there any other better option than this?

    Hello

    cost cutting is the method of managing the organisation with limited resources .

    This happens mostly during recession time when there is less project and there gets the scarcity of resources due to which the oraganisation become unable to pay their employee
    which leads to downnsizing their employee number.

    Yes there are other options of costcutting like reducing their benefits, and other allowances.

    Only strong and better performing employees can survive in this scenario.

    and the employees having higher education can survive as well.

    Regards

  4. #4
    Sai Deep Array
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    Re: Why is cost cutting done by downsizing the employees? Is there any other better option than this?

    Hello,

    When recession stucks , the company doesnot have enough fund .
    The company goes into loss .
    In that situation company get unable to pay the salary to their employees.
    So it start downsizing their employees.
    This way the employees suffers a lot.
    the company does not gets work and projects so it lay off its employee.
    There is another way of cost cutting instead.
    The company can cut off the benefits and amenities of the employees.
    This can be done temporarily until recession .

    Thank you

  5. #5
    Ashok Array
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    Re: Why is cost cutting done by downsizing the employees? Is there any other better option than this?

    Dear Aspirant,

    It is the easiest method to bring down the establishment expenses of the company.The other ways are there,but they are difficult.The other methods to increase the resources are to improve the quality of products so that marketing of the company product may go up.Also the cost of product may be reduced to enhance the sale ,by which revenue collection may increase for the company.

    In lack of the new project with the company,recession is done.In such cases,the company is unable to pay to the employees.So recession of the employee is the best option for the company.

    Thanks.

  6. #6
    SKS Array
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    Re: Why is cost cutting done by downsizing the employees? Is there any other better option than this?

    Any Company only starts downsizing excercise, when they have got less work or order or they are not getting more new work.
    Now to run the business and offices costs are involved.
    There are many costs like building rent, electricity, phone bills etc which are fixed and company cannot do much to reduce that in times of less work.

    But Employees Salary is the major cost for all the companies across the world.

    So if there is no work for the employees , they start reducing the employee strength.
    Its not always necessary , that only contract people and new employees will be asked to leave.

    Company uses this opportunity to remove employees, who are not working properly and getting higher salary.
    Company also removes or abolishes few senior positions as well.

    They do this just to be afloat or be in the business and when the work environment improves and they get more work, they can always hire new employees.
    This is the Last resort that Company does by removing Employees, first they try to reduce costs by all other methods.

  7. #7
    Unregistered

    Re: Why is cost cutting done by downsizing the employees? Is there any other better option than this?

    Quote Originally Posted by Unregistered View Post
    At the time recession most of the time the companies do cost cutting through downsizing. And their prey will be either newly joined employees or who are working on contract basis. Why is cost cutting done by downsizing the employees? Is there any other better option than this?
    Hi

    as during recession the companies dont have enough financial resources so they are forced to downsize by reducing the employees as they cannot pay for them

    they can reduce the salaries of employees which is the otrher option but they cant do it as many employees will leave then

    Thanks

  8. #8
    Boss Array
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    Re: Why is cost cutting done by downsizing the employees? Is there any other better option than this?

    When recession comes firms are going to be badly affected to fulfill there quarters revenues.

    As there'll not be a lot of comes that point they'll not be ready to show their resource employment. As most of the project works on time and material basis, if the resource isn't billable can be robust for leader to justify which will have serious impact on the revenue. to fulfill this challenge immediate action is saving the redundant resources, under-performers,contract staff and someday freshers as there'll not be a lot of project for them at that time in time.

    There area unit different choice of cut like allowance, claim advantages may be reduced, staff are going to be asked to require vacation leave (if vacation leave is left company must pay back) in order that company can get profit.

    Except for a industry easiest method is to downsize redundant resources to fulfill their revenue throughout recession.

    It is the best technique to bring down the institution expenses of the corporate.The other ways in which area unit there,but they're troublesome.The other strategies to extend the resources area unit to enhance the standard of product in order that promoting of the corporate product could go up.Also the value of product is also reduced to boost the sale ,by that revenue assortment could increase for the corporate.

    In lack of the new project with the corporate,recession is completed.In such cases,the company is unable to pay to the workers.So recession of the worker is that the most suitable choice for the corporate.
    Any Company solely starts saving excercise, once they have gotten less work or order or they're not obtaining a lot of new work.
    Currently to run the business and offices prices area unit concerned.
    There area unit several prices like building rent, electricity, phone bills etc that area unit mounted and company cannot do a lot of to cut back that in times of less work.

    But staff remuneration is that the major value for all the businesses across the globe.

    So if there's no work for the workers , they begin reducing the worker strength.
    Its not forever necessary , that solely contract individuals and new staff are going to be asked to go away.

    Company uses this chance to get rid of staff, WHO aren't operating properly and obtaining higher remuneration.
    Company conjointly removes or abolishes few senior positions moreover.

    They do this simply to be afloat or be within the business and once the work atmosphere improves and that they get a lot of work, they'll forever rent new staff.
    this is often the expedient that Company will by removing staff, initial they fight to cut back prices by all different strategies.

  9. #9
    you@ Array
    Join Date
    Dec 2012
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    295

    Re: Why is cost cutting done by downsizing the employees? Is there any other better option than this?

    Quote Originally Posted by Unregistered View Post
    At the time recession most of the time the companies do cost cutting through downsizing. And their prey will be either newly joined employees or who are working on contract basis. Why is cost cutting done by downsizing the employees? Is there any other better option than this?
    .........Hello Friend...........

    ......A
    s per your information,When recession comes companies will be badly affected to meet there quarters revenues. As there will not be much projects that time they will not be able to show their resource utilisation. As most of the project works on time and material basis, if the resource is not billable it will be tough for employer to justify and that will have heavy impact on the revenue. To meet this challenge immediate action is downsizing the redundant resources, under-performers,contract employees and sometime freshers as there will not be much project for them at that point in time.

    There are other option of cost cutting like travel allowance, claim benefits can be reduced, employees will be asked to take vacation leave (if vacation leave is left company needs to pay back) so that company will get benefit.

    But for a service industry easiest way is to downsize redundant resources to meet their revenue during recession.

    ......So, Best of luck..
    ...

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