The layoffs account for about a third of its staff in Bangalore, the report said. Yahoo shares closed 1.4 percent lower after the report and were modestly higher in after-hours trading.
Yahoo CEO Marisa Mayer had been weighing layoffs in the area since early in her tenure, people familiar with the matter told Reuters.
Yahoo confirmed the firm's plans to consolidate, but it did not offer details. "As we ensure that Yahoo is on a path of sustainable growth, we're looking at ways to achieve greater efficiency, collaboration and innovation across our business,'' the company told CNBC in a statement.
"To this effect, we're making some changes to the way we operate in Bangalore leading to consolidation of certain teams into fewer offices. Yahoo will continue to have a presence in India and Bangalore remains an important office."
The announcement comes a few weeks after activist investor Starboard Value pressured the company to cut back on expenditures and recommended that it merge with AOL .