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In the video tutorial, the speaker demonstrates how to reduce the size of an Excel file without deleting any data. The first step is to compress picture sizes by selecting the picture, going to picture format, and choosing compress under adjust. Different options are available for compression. An alternative method is to go to file, click on more, then options, then advanced. In image size and quality, ensure discard editing data is selected and do not compress image file. Adjusting the PPI can make the image smaller. By following these steps, the file size can be reduced efficiently.