AOL Inc plans to contract its staff by 900 job positions which is about 20% of its global workforce. With 5,000 workers AOL will cut nearly 400 jobs in India, outsource another 300 there, and eliminate 200 jobs in the United States, a source close to the company said. At its peak AOL had over 20,000 workers.

However, since the 2001 takeover of Time Warner Inc and its spin off in 2009, the AOL has been sadly declining.

"We want to run a profitable, growing, content-driven advertising-driven company and not mask that with access cash," AOL Chief Executive Tim Armstrong told an audience of media executives in New York, confirming the cuts.

Armstrong is attempting to reshape AOL from a company known for its dial-up access business to a media and entertainment powerhouse that relies mainly on advertising.

"You can't be great in our business if you don't go to sleep every night thinking how are we are going to make magical content for people in the morning," he said.