This article discusses the concept, strategies, impact, and implications of downsizing in a general way, followed by a focus on the present state of downsizing in India. In the light of the above statement, it presents some case studies on downsizing with a view to providing a multidimensional picture of this paramount phenomenon. The study reveals that there is a general tendency with firms to resort to downsizing as a short-term strategy to solve their long-term problems. Further, though the downsized firms could register rise in productivity initially, these gains could not be sustained over a period of time. Finally, it reveals that success in downsizing requires matching the strategies with situations and convincing employees about the logic of downsizing.

The inexorable and worldwide tide of deregulation and privatization of markets has resulted in cut-throat competition, coupled with pressure for improvement in cost, quality, cycle time, and performance. The global competition in industries as diverse as textiles, shipbuilding, consumer electronics, semi-conductors and automobiles has created new pressure for efficiency. Firms are now required to transcend local standards and attain global standards that are relatively stringent. For example, Ford can no longer derive satisfaction by comparing itself with General Motors; it has to compare itself with Toyota, a global standard for efficiency.

This uncertain economic climate and an emerging global marketplace, over the past two decades, have caused organizations to re-evaluate how they function and to land in what Gaucher (1997) calls a "paradigm shift". Companies that once focused on size, specialization, job descriptions and price are now increasingly emphasizing on speed, integration, job flexibility and value in a holistic way, sparking off an intensifying trend of organizational change. As Alevras and Frigeri (1987) state, "corporate change is the rule of the day".