What Are The Reasons For Downsizing

Every few years the economy goes into a spin and the booming economy starts going into recession. The reason for the recession can be many. In a recession, there are many jobs that are lost because the whole economy itself starts slowing down. The jobs are lost because the people start spending less in a downturn. When people spend less, there is less profit in the companies. The less profit leads to decreased production and as the production decreases the companies usually decrease the number of employees appointed in the companies. So what are the reasons for downsizing either in a recession or even when there is no recession.

The most important reason for the downsizing which also means decreasing the work force working in a company is the loss the company is having. When the company goes at a loss, the production has to be decreased or other methods have to be done to decrease the costs of the company. The other method of doing away with the loss is to increase the profits. The profits are difficult to increase in a recession. So the easiest method of decreasing the cost is to decrease the number of people working in the company and this is the downsizing.

The next important reason for the downsizing can be the company policy to decrease the workforce for various management reasons. The company has to show increased profits to the share holders. This is another reason for the decrease in the number of employees working in an organization and the cause of downsizing.

Another reason for downsizing can be the mechanization that is in progress. As the world keeps changing, there is an increase in mechanization all over the world. Computers are being used increasingly to do many jobs. This mechanization process has many implications as far as the number of jobs is concerned. As more number of equipments are used and computers are used, the requirement of manpower decreases and this also saves money for the company. This is another important reason for many companies to downsize their work force.

These are some of the most important reasons for downsizing. This may cause a lot of heart ache for the people concerned, but when the economy develops, the job numbers increase again and almost all the people who had lost their jobs due to the downsizing get back some other job. This is because an expanding economy causes more jobs to be opened up.

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