Computers Associates is lopping off 900 positions from its global staff.
The US network and systems management software firm announced on Thursday that it would be reducing its headcount by 5 per cent to 17,000. In the statement, CA president and CEO Sanjay Kumar said this move would "reflect the complex realities that our company and many other companies are faced with today." Additionally, he claimed this move would keep CA in line with its new business model introduced last year.
"We can do more with less because the business is more evenly distributed," said a company spokeswoman.
CA has moved to allow customers to create contracts more flexibly than before -- on a monthly, quarterly or yearly basis -- instead of for fixed periods of time.
The new model also led CA to switch its accounting system. Formerly, CA had booked the full value of a contract upfront. Under the new business model, the value of a contract is counted incrementally on a monthly basis.
CA did not respond immediately to a request for more information.
"Our products and new business model continue to be well regarded by our customers and the marketplace," Kumar stated. He also said the business is positioned to grow and "serve the needs of our customers."
CA is offering the laid-off employees, who are mostly from its North American units, severance packages which will include extended salary and benefits. The cost of the packages will run to about $US20 million for the current quarter, which ends December 31.
The firm may be treating these employees with extra care to avoid the sort of bad publicity it got earlier this year. At that time, CA found itself under the spotlight after ex-employees claimed they had been dumped unfairly in a wave of mass firings. At the time, CA confirmed it had let go 314 employees but said it was because of "performance related reasons".
Nevertheless, a number of the ex-CA employees said at the time that the firings were done unfairly to cut expenses and relieve CA from the burden of paying them severance.