Yahoo has confirmed it is axeing 2,000 posts, which amounts to 14% of its workforce being laid off, BBC reported.
It marks the sixth time in four years that the web portal has announced sizeable job cuts.
The news coincides with plans by Skype to create about 400 new posts across five cities.
The internet video-calling business - which is owned by Microsoft - said it was initially looking to take on staff in London and Stockholm.
Other posts will later be created in Tallinn, Estonia; Prague, Czech Republic; and Palo Alto in California, US.
Yahoo said its cuts aimed to deliver a "smaller, nimbler, more profitable" company that was cheaper to run. It added that the action was designed to save about $375m (£236m) a year.
The move follows a period of turmoil at the firm.
As Yahoo shrinks, Skype is growing. Once all the new positions are filled, the business expects to have 1,600 employees worldwide.
As part of the expansion it is launching a new technology centre in central London. It says the move will increase its headcount in the city by 40% to 330 posts.
Skype says the UK government's desire to monitor people using its services did not influence its move
It aims to have completed the first stage of the hiring process by the end of June.
Skype's vice-president of product and design told the BBC the new jobs would cover software engineering, product management and design.
"We have one project about 'big data', which is about making use of data that our users generate when using the product to improve the quality of the products we offer," said Rick Osterloh.
"We also a number of initiatives we are working on in the web area, and we are hiring some positions for our newly formed Xbox division."
Mr Osterloh said the UK government's intention to give its security services increased access to internet data should not affect its plans.
Deputy Prime Minister Nick Clegg has specifically identified Skype as one of the services that the government wants to be monitored.
However, Mr Osterloh said the peer-to-peer technology used for its call and instant-messaging services meant that it did not store the contents of communications on its servers, and so would not be able to hand the information over.