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In this video, the tutorial demonstrates how to reduce the size of an Excel file without losing any data. It is recommended to save a copy of the original file before attempting any changes. The first step is to compress the picture size in Excel by selecting the picture, going to picture format, and then compressing under adjust. Various options are available for picture compression, such as setting the PPI for printing. An alternative method is to go to file, click on more, then options, and finally advanced, where you can adjust image size and quality settings to ensure that pictures are always compressed.