The Chattanooga-based Incentium firm has had to lay off 25-30 employees, officials confirmed.
CEO Richard Char said employees were told of the reduction in force last Thursday.
He said it was "due to the soft economy. Companies are cutting back and so we have fewer orders for our employee incentive programs."
Mr. Char said, "We made it clear that this was a right-sizing and it was not based on employee performance. Some of the people we had to let go we very, very much like and hope to be able to hire back."
He said the firm, which was founded by Loft Restaurant operator Hamid Andalib as VIPGifts, eliminated some positions in trying to gain efficiencies.
He said most of those affected were from Chattanooga, but some were "from out in the field."
The firm is still headquartered in the the former Loft building on Cherokee Boulevard.
Mr. Andalib sold the firm in October 2008 to private equity and venture capital firms Summit Partners and Bridgescale Partners. The new owners brought in Mr. Char to run it and changed the name.