Academic journal article Review of Management

Critical Issues in Downsizing in India

Academic journal article Review of Management

Critical Issues in Downsizing in India

Article excerpt


The Indian corporate sector was fabulously liberal in increasing the size of the workforce, especially in the public sector, during the pre-liberalization period. The Indian government.s policies pertaining to strengthening the public sector, employment generation, pampering trade unions, and reckless recruitment based on political expediency resulted in overstaffing and consequent human resource problems. With the dawn of Liberalization, Privatization, and Globalization (LPG) in 1991, the Indian corporate sector was forced to compete in the global market by focusing more on productivity, profitability, service excellence, quality, innovation, and cost containment. During the 1990s, many Indian organizations resorted to cost-cutting exercises through downsizing the workforce, and considered the organizational restructuring as a powerful and inevitable tool of earning and sustaining competitive advantage. Organizations are governed by nine key elements: people, structure, task, technology, culture, strategy, processes, systems and environment (internal and external).

As a compulsion, organization has to invariably focus on "clean, lean and green organization" in order to meaningfully survive, grow and excel in the long run. It is acknowledged all over the world that the 'effectiveness' of an organization largely depends on its 'people'. They can keep the place (reputation) and set the pace of the progress of any organization. In this sense, human resource can act like a "double-edged sword.: if managed properly, they can bring prosperity; if mismanaged, they can undoubtedly cause havoc.

Furthermore, human resource of an organization will be considered as a common denominator to govern the behaviour of the task performance (e.g., service excellence in a bank), organizational structural synergy (e.g., efficiency-driven, people-friendly, goal-oriented workflow, communication flow, information flow and human resource flow), performance-driven Information and Communication Technology (ICT), long-term business-related corporate strategies, supportive organizational culture (openness, confrontation, trust, authenticity, pro-action, autonomy, collaboration, and experimentation), fool-proof systemic arrangement to achieve synergistic and symbolic integration of organizational processes and objectives, highly fine-tuned and simple organizational processes, and finally agility and dynamism to cope with the internal and external environmental influences. In the fitness of things, organizational downsizing poses both opportunities and potential threats to the organization. This article focuses on the key drivers; benefits and costs of downsizing from the points of view of the organization, employees, and the society-at-large; how to downsize without tears, and finally, raises certain questions to be empirically examined and answered by future researchers in the field.

Organizational Restructuring and Downsizing

As a result of Liberalization, Privatization, and Globalization, open competition erupted and posed a grave threat to the traditional business houses. Many efficient business houses collapsed, many financial engineering activities came into being for the survival of business. Corporate restructuring is one such area which has emerged recently. Organizational restructuring is an umbrella term that includes mergers, consolidations, divestitures, liquidations and various types of battles for corporate restructuring and used to mean almost any desirable change in operations, capital structure and ownership that is not part of the firm.s ordinary course of business.


* To know the driving forces of downsizing

* To identify the downsizing strategies

* To know the reasons for organization downsizing

* To identify the merits, demerits and effects of downsizing


This study was descriptive and analytical in nature. The study was mainly depended upon the secondary data to develop this article/paper. …

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