The layoffs will hit PayPal's product and technology organization hardest. That's where nine product groups will be collapsed into a single group, eliminating internal barriers between teams formed around products.
"Instead of being organized around projects, our teams will now be dedicated to products and focused on our customers -- consumers, developers, small businesses and large retailers," David Marcus, PayPal president, .
The changes will also hit around 120 contract workers who are based around the world.
"While PayPal is strong and performing well, making decisions that impact our employees was hard," wrote Marcus. "So this is a difficult day at PayPal."
He said he expects the changes will enable PayPal to introduce new products faster than before.