Freshworks, a leading business-software company based in San Mateo, California, announced on Tuesday that they will be reducing their workforce by 11%, which amounts to approximately 500 jobs. This decision comes as the company navigates the disruptions caused by the rapid advancements in artificial intelligence (AI) within the industry.
As a provider of software that specializes in managing customer service and tech support, Freshworks has been impacted by the increasing trend of companies incorporating AI into their operations. This move towards automation aims to streamline processes and enhance products, but it also comes with significant costs. In a similar vein, Atlassian recently announced plans to cut around 10% of their workforce in response to these industry shifts.
The emergence of AI tools from companies like Anthropic has posed challenges to traditional software makers, including Freshworks and larger competitors such as Salesforce and ServiceNow. This technological evolution has led to a decline in Freshworks’ stock by about 26% this year.
Freshworks’ CEO, Dennis Woodside, explained that the decision to downsize was driven by the integration of AI in product development and engineering, as well as the automation of routine tasks throughout the business. Woodside noted that over half of their code is now generated by AI, leading to a reduction in manual work that can be automated.
The restructuring at Freshworks will impact departments globally and incur one-time charges of approximately $8 million. The company, which had around 4,500 full-time employees as of December 31, 2025, plans to reinvest the savings from the layoffs into its Employee Experience business, particularly focusing on its IT service management software, Freshservice.
In a broader context, a website called Layoffs.fyi reported that a significant number of employees, totaling 92,462, have lost their jobs in the tech industry this year. Despite the layoffs, Freshworks remains optimistic about their financial outlook, with second-quarter revenue projected to fall between $232 million and $235 million, exceeding analysts’ expectations.
In the first quarter, Freshworks saw a 16% increase in revenue, reaching $228.6 million, slightly surpassing estimates. However, the adjusted profit per share came in at 11 cents, missing the projected 12 cents.
Overall, the company is taking decisive steps to adapt to the evolving landscape of the software industry, leveraging AI and automation to enhance efficiency and drive growth in key areas of their business. With a strategic focus on innovation and cost-saving measures, Freshworks is positioning itself for long-term success in a competitive market.
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