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Knowledge  Center | Posterity Consulting


Knowledge Center

Layoffs on the Rise: Understanding Causes and Spot

Recent news headlines about job losses on social media, short news service platforms, print media, or electronic media seem to indicate that there have been a lot of layoffs or retrenchments taking place. The technology or internet-based economy is where these layoffs are most prevalent, especially among startups that received significant funding from institutional investors, venture capitalists, and private equity investment segments. While there may be financial justifications for these layoffs, there may also be behavioral ones, such as excessive hiring, expensive talent acquisition, hiring unskilled labor, or too much middle management.

Over-Hiring: An organization may have an excess of workers who may not be fully utilized or productive if it hires more people than it actually needs to carry out its operations or if it experiences slower growth than its workforce size. In order to lower costs and increase efficiency, the company might have to reduce its workforce.

Acquisition of Expensive Talent: Sometimes businesses spend a lot of money hiring expensive talent with specialized skills or knowledge that may not be necessary for their current operations or future expansion. When the organization's priorities or focus shift later, it might not need the same level of expertise or skills, which could force the organization to let go of its expensive talent. This is especially true for startups that may have overvalued the talent they hired because they received significant funding.

Onboarding Unskilled Workforce: A company may have an ineffective or underproductive workforce if it hires talent without carefully evaluating their background and skill set, or if it reaches a point of talent saturation with similar skill sets. When it becomes necessary for the company to reduce costs or restructure the organization in such situations, the company may move towards downsizing.

Excessive Middle Management: Employees in the middle management class aren't thought of as either cross- or individual contributors. Therefore, it becomes a liability when there is an excess of middle management in an organization, particularly when it comes to those who have pushed for bad judgement or anticipation at the management level. Therefore, businesses search for methods to reduce overly involved management and use this as a chance to course-correct in order to improve the company.

Even though it's true that many companies are cutting staff, this isn't true in every industry. Sectors like outsourcing, consulting, and global capability centers all still have open positions. These industries are driven by demand from businesses looking to outsource their work operations or hire consultants to improve their operations. Additionally, the Indian economy has proven to be resilient in the face of global economic downturns. Its primary source of energy is domestic consumption, which offers adequate defense against shifts in the global market. This suggests that even in these uncertain economic times, there might be opportunities for skilled workers.

It's crucial for those who have been affected by layoffs to maintain their optimism and hope. Finding the right opportunities that fit your abilities and experience is the key. It might be necessary to make some preparations, like updating your resume and building a network of industry professionals.

It's also essential to have reasonable expectations because the job market might be competitive. However, it is possible to find fulfilling work and continue to develop a successful career with perseverance and a positive outlook.

It's important to think about enhancing your skill set by taking online courses or attending workshops in addition to networking and updating your resume. You may become a more attractive candidate on the job market as a result. Additionally, researching businesses and industries is beneficial.

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