AOL to cut 20 percent of global workforce: source

AOL Inc will cut more than 900 jobs, or 20 percent of its global workforce, as it struggles to catch up to Google Inc and Facebook.

AOL, which has 5,000 workers, will cut about 400 jobs in India, outsource another 300 there, and eliminate 200 jobs in the United States, a source close to the company said.

Once known as the training wheels of the Internet for tens of millions of people, AOL had more than 20,000 workers at its peak.

But since the 2001 takeover of Time Warner Inc and its spin off in 2009, the AOL saga has been one of precipitous decline as generations of web startups overtook the once mighty giant. Zynga, the privately held social games company, said on Thursday it planned to double its staff to 200 employees in India.

We want to go from taking arrows to catching arrows, AOL Chief Executive Tim Armstrong told an audience of media executives in New York, confirming the cuts. Today is a difficult one for our company.

He added: AOL will turn around.

The cuts come two days after AOL completed its acquisition of The Huffington Post news and commentary website for $315 million.

Arianna Huffington, the pundit and founder of the influential website, took over AOL's editorial operations as part of the deal.

In India, 300 jobs will be transferred to contractors MindTree Ltd and Hewlett-Packard Co, another source told Reuters.

In the United States, AOL plans to cut jobs in the media and content-production areas, leaving advertising sales and network operations positions untouched, according to the source reporting the 900 job cuts.

The source said the company planned to bolster the ranks of its full-time journalists and move away from a reliance on freelancers.

Through the global economic recession, AOL prided itself as one of the biggest recruiters of out-of-work journalists as a severe decline in advertising revenue in the newspaper industry wiped out newsrooms across the United States.

Armstrong said AOL had hired 1,300 journalists last year. It was not immediately clear how many of those will remain.

AOL shares were down 3 cents at $19.31 on morning trading on the New York Stock Exchange.

(Additional reporting by Jennifer Saba in New York and Himank Sharma in Bangalore; editing by John Wallace and Derek Caney)