The article deals with understanding the phenomena of employee rationalisation in firms especially the ones operating in dynamic environments. In this paper the authors do an extensive review of literature to understand the complete cycle, which is from environmental conditions leading to employee surplus consequently leading to firm implementing relevant strategies to deal with the situation and the consequences thereof on firm and individuals. The authors focus their attention on high technology firms and the relevant strategies for managing employee surplus in such firms. They extend the literature by proposing the relevance of tacit knowledge in situations where employee surplus needs to be managed and how it can be retained for preserving the competitiveness of firms.