Well, laying off is just one of the way to cut costs, a few better way could be:
1. Diversify the business - look for new markets and motivate your existing staff to go for it - instead of hiring from outside for new markets
2. Reduce inefficiency in existing business - find innovative ways to cut costs - involve the whole organization in it by asking all to contribute ideas.
3. Think long-term - calculate costs too on a longer horizon - use the lean times to train employees - business will always not be down , but use this relatively idle to train employees on new skills - so that when business is back on track, the organization is not loosing precious time in trainings or hiring etc.
And even if a company has to lay employees off - do it in just way - the one which is correct legally as well as morally - which could be justified too (on performance, business etc basis ) - so that those employees who have not been given pink slip do not leave your company as soon as a better opportunity comes in their way...or even those who've been laid off don't resent it and try to tarnish its image.