The trick for this being successful is most of the time by challenging the processes themselves, rather than the employees. Employees aren't useless, but process are. The reason you need 500 people rather than 250 or 100 or 50 to do something might be simply because you said so somewhere or sometime.
So, companies should review and change processes BEFORE reducing headcount. But alas, companies don't ever do it, because it requires introspection, egolessness and actual work, the sorta stuff that is rare in upper management.