Update: An AOL spokesperson has confirmed to us that business operations functions including Finance are being moved to Mindtree, and some of the retained employees are from AOL Mobile, working on the Coolage product. “…Approximately 400 people in India will be transitioned out of the company and 300 people transferring to outsourced partners. I can’t confirm severance details. ”

Update: According to a memo from AOL CEO Tim Armstrong, published by Business Insider, 400 in India will be fired, while business processing functions and 300 employees will be transferred to business partners (Mindtree and HP). The memo says that the India office will focus on Asia and India related consumer products and revenue.

Update: According to our sources, the teams being retained include mobile and APAC related teams. The 300 employees being moved to contractor status are being transferred to Mindtree and HP. Teams being transitioned include engineering, and support teams like finance and AOL’s access/paid services related teams.

Earlier: It’s worse than expected. MediaNama has learned from reliable sources that AOL is cutting around 400 jobs in India, and transitioning 300 of its employees to a contractor status. Layoffs are currently under-way. Employees are being given 2-3 months severance pay, and an additional tenure pay in accordance with their time on board with the company. For example, those with three years of employment with AOL India are getting an additional three weeks pay. The 300 employees will be transitioned to a contractor status by June 30th 2011, MediaNama has learned. We’ve contacted AOL PR for confirmation.

So far, we’ve only received a statement saying that the company will be partnering with Mindtree and HP “to round out” its business operations. AOL India’s focus will be on building consumer facing products primarily for the Indian and other Asian markets.

We’ve asked AOL for details of which teams are being cut completely, what work is being transferred to Mindtree and HP, and whether any employees are also being transferred to Mindtree and HP.

We’ll update with more details in case we have any. If you are or were with AOL and have information to share, email nikhil@medianama.com, call +919810310053 or use our anonymous tip box.

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