IBM Corp. Thursday announced that operations will be closed down in five Swedish cities, as 538 employees were informed that they will lose their jobs.

In Vasteras, this affects 284 employees; in Linkoping, 36; in Alingsas, 39; in Huskvarna, 57; and in Eskilstuna, 122. The plan is to close down operations entirely in these locations.

"We are planning to close these offices. However, we are first giving notice and then there will be negotiations. Still, this is definitely our plan," said Barbro Lado, a press officer for IBM in Sweden.

Nothing new is planned for the locations mentioned, IBM said.

"IBM has an internal employment agency, and anyone at IBM is free to apply for a job there," Lado said.

IBM could not confirm rumors that the jobs will be outsourced to other countries, which sources claim is the plan.

IBM, however, said that operations will be relocated to other IBM units in Sweden.

"My information is that there is to be coordination with all operations in Sweden, including Stockholm, Goteborg, Malmo and Sundsvall," Lado said.

Marina Aman, chairman of the corporate-wide SIF trade union at IBM, in a report from news agency TT, said company management attributed the layoffs to IBM losing several major contracts.

IDG Sweden reported recently that insurance company Skandia Insurance Company Ltd. did not renew its outsourcing deal with IBM, instead selecting Volvo Information Technology AB for its mainframe operations. Skandia, along with grocery chain ICA AB and insurance companies If P&C Insurance and Storebrand ASA, were part of a consortium that worked jointly with IBM as their outsourcing partner. However, during recent months, several of these companies chose to make their own outsourcing deals.

Skandia selected a new outsourcing partner while Storebrand cancelled its contract with IBM and is looking for a new partner. If is searching for an outsourcing partner for its entire IT operations, and IBM is just one of several bidders.

The IBM offices in Linkoping and Eskilstuna work mostly with systems development and administration. In Vasteras, Alingsas and Huskvarna, IBM"s business is mostly outsourcing.

In 2002, IBM acquired ABB IT Partner, with 381 employees, mostly in Vasteras. Last summer, IBM closed down its operations in the city of Ostersund, and 157 people lost their jobs.

IBM expects negotiations with trade unions and authorities to be completed by the middle of the third quarter.