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The video tutorial explains how to reduce the Excel file size without deleting any data. It is important to save a copy of the file before making any changes. The first step is to compress picture size in Excel by selecting the picture, going to picture format, and compressing under adjust. Different options are available for compression levels. An alternative method is to go to file, click on more, then options, and advanced to adjust image size and quality settings. Make sure to discard editing data and adjust PPI to reduce file size permanently.