Downsizing, Outsourcing, Privatization & You
- Simply stated,
"downsizing" means "reducing in size," and usually means cutting the
number of workers. If positions can be "downsized", then there is an
assumption that your original employees either didn't have enough to do, or weren't doing
it efficiently. What may happen, though, is that surviving workers end up working longer
hours and/or service and production suffer. Regular workers may also be replaced by
temporary workers, or the jobs may be outsourced -- in which case the organization
often creates new positions to manage the outsourcing.
usually affects a group of people at one time, so it is seen as being better than being
- Outsourcing simply
means having a job done by someone who is not a regular employee, and is usually done by
contracting with another company to provide the service. The advantage is that you don't
have to worry about salaries and benefits. The disadvantage is that you lose some control
over the way the job is done. Companies may identify their "core competencies"
(buzzword for "things they do best") and outsource the rest.
jobs that are commonly outsourced are copying machine maintenance, janitorial services,
("to make private") takes jobs that were in the public sector and gives
them to the private sector. The idea is that there are some things that government or
non-profit public agencies do best, and some things that are better done by private or
In its pure
form, the public sector gives over complete responsibility. In the UK, for example,
Thatcher's government sold more than 40 state-owned enterprises including Jaguar and
British Airways. Most of the time, though, the public sector retains some control,
and then "privatization" is just another word for "outsourcing.",
where the job is still being done, but it just isn't being done by public employees.
- A blanket term referring to business processes that can involve all of
the above. Reengineering can also be used as a euphemism for "downsizing".
Next: What's Wrong With Downsizing,
Outsourcing, and Privatization?