ICL is cutting up to 700 jobs worldwide in an attempt to raise profitability before its stock market flotation next year.
At least 200 jobs are likely to be lost in the UK as ICL seeks cost savings of up to 15 per cent in an exercise codenamed Project Charlton.
The losses will come from the operational services division, which employs 11,000 people, about half its staff.
The company says it wants to focus on electronic business services and customer relationship management.
The company hopes to redeploy as many people as possible, but admits that redundancies are inevitable. Staff are being given 90 days notice to find other jobs within the ICL group or face redundancy.
Most of the axed jobs are likely to be in administration and support, but service engineers will also be affected. ICL says that remote diagnostic tools and increased use of mobile technology allows engineers to work more efficiently.
Bob Aylott, outsourcing consultant with KPMG, said the move is consistent with ICL's strategy of focusing on providing services to other IT services companies, such as EDS.
"ICL is less interested in taking on business on its own account, which means you need fewer support staff," he said.
ICL's chief executive Keith Todd has committed the company to reaching a six per cent operating margin before it is floated next year following a 16 year absence from the stock market. ICL said this week it is currently running at a three per cent operating margin.
Some City analysts are sceptical about the plans. The company was heavily hit in May by cancellation of the Pathway benefits card project for the Post Office, and wrote off £180 million in development costs. ICL says this had no impact on jobs.
Peter Skyte, national secretary of the IT wing of the Manufacturing, Science and Finance union, said his organisation will urge ICL to keep job losses and redundancies to a minimum.
ICL denies that Project Charlton is related to its plans for flotation.
"The redeployment programme is about managing our resources in accordance with the needs of our business and our commitment to reduce costs," a spokesman said.
The company has yet to appoint financial advisers for the flotation.
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