When a company cuts down its labor force to reduce costs, this is known as downsizing. It is a permanent action where the organization makes staff members redundant. It is a commonly used cost-saving strategy in companies that may be struggling. By letting people go, the business saves on labor costs.
Sometimes, an entire store, division, or branch can be downsized. Downsizing can also be done as part of a corporate restructuring process. While it is often done because a business is experiencing a downturn, it can also be used when a company wants to become more efficient and streamline its processes.