Computer Associates, the US software group, said it would cut 5 per cent of its staff, or about 800 jobs, in a bid to trim costs in an increasingly cutthroat market.

The restructuring plan is expected to bring about $70m of savings a year, although New York State-based CA warned it would cost $40m in total with $25m occurring in the second quarter of 2005.

CA said the cuts, which come as part of a wider reorganisation including a rationalisation of the company’s product range, would affect nearly all departments, with the majority completed by the end of October.

CA’s move comes amid a difficult time for the competitive business software market as customers delay payments and hold out for lower prices. As a result, slow-growing CA is looking to cost-cutting to boost performance.

“CA is financially strong, but we must make these changes to grow sales, increase profitability and remain competitive. The result will be a simpler, more efficient company and one positioned for growth,” said Jeff Clarke, chief operating officer.

Kenneth Cron, interim chief executive, sought to reassure the market that the restructuring would not compromise its agreement with federal prosecutors over charges of accounting fraud.

Last week Sanjay Kumar, the former chief executive who was forced to quit the CA earlier this year, and two other executives were charged with fraud and the company agreed to pay $225m compensation to shareholders in a deal with the Securities and Exchange Commission.

“The restructuring will have no effect on our ability to fulfil the obligations of the deferred prosecution agreement…we are committed to fulfilling every requirement,” said Mr Cron.

The US regulator claims CA misstated $3.3bn of revenue between 1998 and 2001.

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