Oracle will sack around 5,000 people as it merges with ex-rival PeopleSoft, the company said late on Friday.

It began notifying those affected on Friday and will continue to hand out notices for the rest of this week. The company expects its remaining workforce to stand at 50,000 employees. Before its acquisition, PeopleSoft had about 11,000 employees.

Oracle said further information about the merged company and its product plans will be announced tomorrow (Tuesday) at a launch event for its newly enlarged applications business.

Without going into detail, Oracle said it retained 90 percent of PeopleSoft's product development and support staff. Development will continue on PeopleSoft's next upgrade, version 8.9, and on a 9.0 update to PeopleSoft's applications portfolio.

Oracle has been careful to spare staff directly involved with customers and PeopleSoft's code, said Joshua Greenbaum, a principal at Enterprise Applications Consulting. "The impact for customers of PeopleSoft and JD Edwards is probably going to be minimal," he said. "Employees who have direct contact with customers or the code were asked to stick around."

The number of layoffs is not as big as some feared however, particularly since there is a large overlap between Oracle and PeopleSoft when it comes to back-office departments such as human resources, finance and IT, Greenbaum said. "There is also a fair amount of middle management that you can get rid of," he said. Greenbaum expects a majority of the lay-offs to be of former PeopleSoft employees.

It has been only a week since Oracle officially closed the PeopleSoft acquisition. More cuts may be ahead as the two companies become one, Greenbaum said. "Right now they are taking a first cut. It probably represents a majority of what is going to happen this year, but I would not be surprised if there are further layoffs," he said.