Freshworks Announces 500 Job Cuts Amid AI-Driven Restructuring

Freshworks, a software firm based in San Mateo, California, has announced a significant reduction in its workforce, cutting around 500 jobs globally, which represents roughly 11% of its total staff. This decision, made public on Tuesday, is part of the company's strategy to accelerate its transformation focused on artificial intelligence and automation. The move reflects a broader trend in the software industry, where companies are adapting to rapid technological advancements and shifting business models.

The chief executive of Freshworks, Dennis Woodside, highlighted the substantial role of AI in the company's operations, stating, "Over half of our code is written by AI." He indicated that automation has alleviated many routine tasks traditionally performed by staff, allowing the company to streamline operations and enhance productivity.

Following the announcement, shares of Freshworks fell by over 8% during after-hours trading. This decline mirrors a pattern seen across the industry, as investors react to job cuts associated with the adoption of new technologies. Other software firms, including Atlassian, have also announced job reductions; Atlassian revealed it would cut around 10% of its workforce amid similar challenges.

Freshworks plans to reinvest the savings gained from restructuring into its Employee Experience division, particularly targeting its IT service management platform, Freshservice. These savings are anticipated to arise from consolidating sales teams, reducing management levels, and increasing the presence of automation in operations.

Despite these layoffs, Freshworks has reported ongoing revenue growth, with a forecast for the second quarter of 2026 projecting revenue between $232 million and $235 million, surpassing analyst expectations. The company also recorded a 16% increase in year-on-year revenue for the first quarter of 2026, totalling $228.6 million.

However, the broader context reveals growing concerns within the technology sector regarding the implications of artificial intelligence on traditional business models. Technologies developed by companies like Anthropic are increasingly seen as competitive threats, contributing to both growth challenges and diminished market valuations for established players.

According to Layoffs.fyi, more than 92,000 employees in the technology sector worldwide have been laid off so far this year, reflecting a significant transformation across industries as organisations navigate the complexities of enhanced automation and artificial intelligence.

The latest developments at Freshworks underscore the delicate balance that firms must maintain between cost control and strategic investment. As the software landscape evolves with the integration of AI, companies are rethinking their structures and strategies to stay competitive in an ever-changing environment.