Freshworks said Tuesday it will cut about 500 jobs, or 11% of its workforce, as AI takes over a growing share of internal operations at the customer service and IT support software company.
The business-software company said the cuts will affect 11% of its global workforce and cost about $8 million in one-time charges
Credit: Primathon
Freshworks said Tuesday it will cut about 500 jobs, or 11% of its workforce, as AI takes over a growing share of internal operations at the customer service and IT support software company.
Automation of routine work and the expanding role of AI in product and engineering both factored into the decision, CEO Dennis Woodside told Reuters. "Over half of our code is written by AI," Woodside said, adding that automation had reduced "rote work that technology can take care of."
The company, which had about 4,500 full-time employees as of Dec. 31, 2025, said the restructuring will affect departments globally. Freshworks estimated one-time charges of about $8 million. According to Woodside, proceeds from the consolidation will flow back into the Employee Experience division — home to IT service management product Freshservice — after the company trims its management structure and combines sales functions.
Freshworks stock was down more than 8% in extended trading Tuesday.
The layoffs come alongside first-quarter results that topped revenue estimates. First-quarter revenue of $228.6 million represented 16% growth and cleared the $223.24 million analyst estimate, though adjusted profit of 11 cents per share fell a penny short of the 12-cent consensus, according to Reuters.
For the second quarter, Freshworks forecast revenue between $232 million and $235 million. The company also landed the two largest deals in its history during the quarter, including its first contract exceeding $1 million in annual recurring revenue, according to the company.
The restructuring reflects a broader pattern in the software industry as companies move to reduce headcount while integrating AI into core workflows. Atlassian $TEAM, a direct competitor, announced its own reduction of roughly 10% of its headcount last month, Reuters reported. Pressure from AI products offered by the likes of Anthropic has also rattled the broader software sector, with share prices at established players — including industry giants Salesforce $CRM and ServiceNow $NOW — taking hits alongside Freshworks.
Freshworks stock had declined about 26% this year before Tuesday's after-hours move.
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.