US-based Bitstream subsidiary Pageflex will lose 26% of its staff across all of its functions, but primarily research and development (R&D), in a bid to save $2.6m (￡1.6m) a year.

Malborough Software Development Holdings (MSDH), the parent company of Pageflex, announced earlier this week that is was cutting 28 staff from its global employee base, including seven contractors, the equivalent of 26% of its workforce.

The company has confirmed to PrintWeek that the cuts will be made across all functions within Pageflex but will primarily affect research and development, operations and administrative positions and "to a lesser extent" sales and marketing.

The reduction in headcount will be made equally across its offices and contractors in Israel and the US, the company said.

A spokesman told PrintWeek: "In accessing how best to utilize our resources we determined that, with the recently released software versions and the overall quality of our software, we could eliminate certain contractors primarily related to development on those new versions and bring the development in house without compromising the quality of future plans.

He added: "With the restructuring in place, Pageflex is poised for future growth. We have started planning for the development of new products that utilize our existing technologies and service the needs of printing and marketing service providers. In addition, we are forming new OEM and technology partnerships that will further expand our product offerings."

The company said that announcements relating to continued product development and additions to its existing product line would be made in the coming months.

Other cost-cutting measures affecting Pageflex staff include salary and work hour reductions.

The Pageflex restructure was announced following the publication of its annual report which revealed a $2.4m operating loss in the three months ending 30 June 2012, compared to the same period last year and a revenue decline of 6%.

In a statement MSDH president and chief executive Pinhas Romik said: "The weak global economy is affecting our market and we have taken the steps we believe necessary to better align expenses with our sales volume, while maintaining our ability to develop innovative products and maintaining relationships with customers, partners, and distributors."