Of American-English origin, the verb dumbsize means: to dismiss (staff) in excessive numbers or without regard to organisational function, with the result that work can no longer be carried out effectively.

The verb dumbsize is a portmanteau combining:
– the adjective dumb, meaning stupid;
– the verb downsize, meaning: a) to reduce the size of (a company or organisation) in order to improve its financial performance; b) to dismiss (staff) as part of a downsizing process.

The texts containing the earliest occurrences that I have found indicate that the verb dumbsize was coined by the Trends Research Institute:

1-: The verbal noun dumbsizing occurs in the following from Experts await IBM’s next move, by Dominic Cappa, published in the Poughkeepsie Journal (Poughkeepsie, New York) of Tuesday 15^th December 1992:

Already IBM has indicated it will have eliminated 40,000 jobs this year, reducing its worldwide work force to 300,000.
He [= Brian Jeffery ¹] expects as many as 30,000 more jobs could be eliminated next year and the cutting could go on until IBM’s bottom line is in order, or the economy turns around dramatically.
[…]
Gerald Celente ², head of the Trends Research Institute, said deep cuts can be costly beyond dollars and cents.
“Eventually downsizing becomes what we call ‘dumbsizing’ when companies carry it too far,” Celente said Monday. “People of talent and experience are lost, taking with them irreplaceable resources and stressing out the people left behind.”

¹ Brian Jeffery was then the managing director of the International Technology Group, an independent consulting firm specialising in the economic and financial implications of information technology.
² Gerald Celente (born 1946) is a U.S. trend forecaster, publisher of the Trends Journal, and founder/director of the Trends Research Institute.

2-: The verb dumbsize occurs in the business column The Bottom Line, published in the Dayton Daily News (Dayton, Ohio) of Sunday 25^th July 1993:

Been dumbsized yet?: The folks at The Trends Journal, a look-ahead newsletter, say rotten things about the national epidemic of corporate downsizings. They call it “dumbsizing.”
Corporations that cut beyond their fat and into their muscle have chopped into long-term profitability, says Gerald Celente, director of the Trends Research Institute, Rhinebeck, N.Y. (914-876-6700). Benefits often are fleeting while long term competitiveness and growth will likely suffer.
“Remaining employees become overburdened, make more mistakes and accomplish less. They lose creativity, fear for their own jobs, talk poorly about the company among themselves and to outsiders.” They feel betrayed and start spending more time looking after their own needs instead of the company’s. “These are issues that a company boat ride or picnic will not correct,” Celente says.
Labor Department records show that downsizing is dumb. Productivity of American workers dropped 1.6 percent in January through March, the first decline in two years, according to Celente. People are burning out from working long hours. “The decline in productivity signals the beginning of a destructive, long-term trend for companies that fail to re-establish esprit de corps—a spirit of common devotion and enthusiasm.”