Mumbai, Nov 22: Rightsizing is the right approach but downsizing is often preceded by an exodus of precious talent.

Downsizing it appears has become the order of the day in the Indian corporate world. But has this seriously impacted the job retention scene in the country? A large number of companies in India no doubt are on a downsizing spree with many of them offering attractive voluntary retirement schemes (VRS). Explains KTA-IIC Partners president Keyur Thakore: "Companies are downsizing in order to make short-term gains and improve shareholder returns in isolation from a wider company vision. It is used as a quick fix method for making the bottomline look better."

But that is not the only reason for downsizing. Global events have now come to influence corporate decision making in India, more so in matters like the size.

AF Ferguson director SP Agarwal explains the trend: "In the early 1990's when there was a boom in the job market, companies were willing to pay higher salaries. But with the collapse of the financial market and the persisting recessionary trend most companies are finding it difficult to manage employee costs." According to him, employment patterns and requirements in the corporate sector have changed since 1994-95. The nature of jobs in various sectors have become narrow and structured. Hence, when companies change their business, employees tend to become redundant in the emerging settings. Those not possessing multiple skills are invariably the worst affected.

Nevertheless, experts say that employers should always employ the right number of employees. Says ABC Search Private Limited managing director R Suresh: "More than downsizing the term to be used is rightsizing. The demand is for people who can deliver and are result-oriented."

Adds Thakore: "I advise organisations to be lean from day one. Flatter organisations are always desirable." But it is sometimes seen that some companies are taking the process of downsizing too far. For instance an foreign institutional investor recently was on a firing spree at the same time doubling salaries. Highlights Suresh: "Downsizing and outsourcing should go hand-in-hand. It is important for companies to know how they downsize and should help in placing them elsewhere''. Thakore feels the same way. "Some reprieve should be given to employees whereby they can be outplaced till they find another job. In other words, handholding their exit."

To cite some recent examples of downsizing, Philips India reduced its workforce by 1,200, petrochem firm Nocil plans to shed 2,000 workers before the year 2000, while ANZ Grindlays offered golden handshakes to 556 employees and Standard Chartered is leaving out 730 employees.

Meanwhile, VRS packages continues to be offered on a regular basis. Glaxo, Siemens, Blue star, Tisco, are companies offering hefty VRS packages to their employees. Apart from cost-cutting measures, the reason for such move has been explained in terms of mergers and restructuring. Take the case of Philips: There was very little competition five years back. But now the company has to resort to strong marketing measures. The need of the hour is to get the optimum mix of HR skills to survive in the market. Observes Suresh: "Organisations need to use their employees intellectually and make sure that they are good in the top-end of the value chain of the products." The implication of a sudden VRS exercise could see the exit of good talent. Says Thakore: "It is possible that highly skilled and talented employees are the first ones to jump the boat at the first signs of retrenchment. So the firm may end up losing its best workers leaving behind average to below par performers." Downsizing could then lead to low productivity and low profitability.