Oracle Corporation, the software database management systems company, is reportedly axed a modest 500 employees from a workforce strength of 86,000, amid rumours last week that the company may lay off more than thousands as the economic downturn is starting to bite the software industry.

The Redwood City, California, based company has axed 500 employees from its sales consultant force in North America, who advise clients on the integration of its business management software and database programs into their operations.

The size of the cuts although small compared to its huge 86,000 workforce, analysts feel that this may not be the end of job cuts as many other computer related companies have started issuing pink slips in large numbers due to plunging revenues and earnings.

In December, the company declared revenue of $5.6 billion for the second quarter of fiscal 2009, which was a 5 per cent increase but it was still below the estimates of industry analysts of $5.84 billion. 

The world's third largest software company, has not declared the lay-offs publicly nor commented on media reports, but analysts feel that the company may have taken the step due to its reacting to slowdown of client orders, both real and imaginary in its consulting business.

Economists feel that Oracle is buckling under amid the recent trend in the industry, where companies have laid off people anticipating declining sales due to the global economic meltdown even though Oracle has posted good results in the previous two quarters.

Other tech companies, who are buckling under and cutting jobs are Seagate, Nvidia, Lexmark, SAP and EMC.

By the end of its fiscal year end Oracle is expected to spend nearly $39 million on employee severance, as per its "Fiscal 2008 Oracle Restructuring Plan" filed to the Securities and Exchange Commission, in December.

In January 2008, Oracle acquired BEA Systems for $19.375 per share in cash amounting to $7.2 billion and it has kept aside $148 million to pay severance to ex-BEA employees if they are laid off, as Oracle had signed an agreement that would guarantee an BEA employee with three to 12 months of salary and health insurance if they are laid off by Oracle within a year of BEA's acquisition.

The acquisition was finalized in April 2008.

As of the end of November, Oracle had $7.4 billion in cash and equivalents.

Oracle has been doing business in India since August 1993 and employs approx 25,000 people spread across 20 centres and early this week it laid off over 40 employees across all its offices in India with the numbers likely to increase in the near future.