Ten years ago everyone exchanged AOL (News - Alert) Instant Messenger (AIM) handles to chat, but today’s social networks have virtually killed the service. Though Facebook integrates chat service with all major instant messagers, most people use Facebook, Twitter and LinkedIn (News - Alert) to connect with friends, family and colleagues. Skype has also taken chatting to a new level by offering free video chat. Why type when you can just talk into your Web cam?

AOL is feeling the pain of falling from its slot as most-used instant messaging service, as the Internet company has  confirmed that layoffs started and will continue throughout the month. The first department hit was AIM. According to multiple news sources, 40 people were cut from the department leaving only the support staff to handle any occurring issues. It is suspected that over 100 people will get a pink slip before the month is over.

The New York Times reports that it costs AOL $25 million to run AIM annually, while it only earns $50 million in sales. The layoffs are expected to save the company $20 million a year. Though AIM is the first department that was cleared out, Patch.com is expected to be next. The department works on IT support for AOL’s local news sites. Executives say those who are laid off are simply people who are “underperforming.”

A spokeswoman for AOL would not specify on exactly which executives and employees are leaving. “We are making some strategic but very difficult changes to better align our resources with key areas of growth for us as a company,” She told the New York Times in a statement. “We remain committed to our presence in Silicon Valley and driving innovation in consumer products and mobile.”

Though the layoffs are worrisome, the news isn’t a surprise. Open your AIM buddy list (if you remember the password) and tell us how many “buddies” you see online that aren’t using Facebook (News - Alert).