The work currently done by the group's IT employees will be outsourced, Ericsson said.

The news came soon after a suggestion by chief executive Kurt Hellstroem that Ericsson might pull out of its loss-making joint phone making venture with Sony.

In an interview with The Wall Street Journal, Mr Hellstroem said Ericsson would not continue to "throw money" Sony Ericsson Mobile Communications.

Reducing costs

The outsourcing of the IT operations will be part of a previously announced cost cutting operation, Ericsson spokeswoman Aase Lindskog said.

Ericsson had already said it would cut a total of 42,000 jobs from its 100,000 strong work force by 2003.

Ericsson is struggling to break even with predicted sales of $13bn (£8.4bn) by the end of next year, Ms Lindskog said.

Ericsson is currently trying to raise 30bn Swedish kronor (£2.1bn; $3.2bn) by issuing new shares.

Ericsson remains the world leader in cellular networks equipment production.

The company's share price rose 5% in afternoon trading in Stockholm.