What is a potential drawback of downsizing workforces to decrease expenses?

Downsizing workforces to decrease expenses often leads to increased vulnerability to economic climates and market changes. When an organization reduces its workforce, it can lose valuable skills and institutional knowledge that are difficult to replace. This can weaken the company's ability to respond effectively to shifts in the market or economic downturns. A smaller workforce may also mean that the remaining employees face higher workloads, which can lead to burnout and decreased efficiency over time. Thus, by downsizing, a company may inadvertently compromise its agility and adaptability, making it less resilient in the face of external challenges.