The job cuts follow €900 million worth of writedowns, which led to an unexpected loss and reduction in the company's earnings target.
Saipem, which is 43 percent owned by the Italian oil company Eni, said earnings had also been hit hard by a collapse in oil prices.
"The further steep fall in the oil price has resulted in a major disruption, which is not likely to be reversed in the short-to-medium term,” Chief Executive Officer, Stefano Cao, said in statement.
“[This] has resulted in clients taking an increasingly rigid approach in the operational and commercial management of contracts.”
Saipem, which has a global workforce of around 50,000, expects to save €1.3 billion between now and 2017 due to the restructuring, which also includes exiting businesses and downsizing its presence in Brazil and Canada.
Net losses for this year are estimated at €800 million. Net debt at the end of June stood at €5.53 billion.
The job losses will be a further blow for Italy's economy, which is struggling to recover from the seven-year long financial crisis.
The International Monetary Fund said on Monday that it could take Italy 20 years to bring unemployment – currently at 12.4 percent – down to pre-crisis levels. The rate has almost doubled since 2008.