When it happened at my previous company several years ago, the CIO was honest and upfront. We were on our 2nd down tick in retail and he said in the next few months they would be letting contractors go. A few months after that he told us they might be laying off or outsourcing certain departments. A few months after that he told us which areas would be effected and that individuals would know if they are being let go on one of 2 days back to back. Everyone knew if they made it through those days they were safe. Then they gave those employees let go 6 months to offload responsibilities, and helped them find new jobs.