issued Wednesday, May 6, 2026 · 06:41 AM
[BENGALURU] Freshworks announced on Tuesday (May 5) that it will cut 11 percent of its workforce, or about 500 people, as the business software company weathers industry-wide disruption caused by rapid advances in artificial intelligence.
Shares of the company, which makes software to manage customer service and technical support, fell more than 8% in after-hours trading.
The layoffs are the latest related to AI in the software business, as companies race to automate tasks and rebuild products around the technology to offset its high costs. Peer Atlassian announced last month that it would cut jobs by about 10%.
At the same time, AI tools like Anthropic have emerged as a potential existential threat to traditional software makers, pushing down the stock prices of companies ranging from Freshworks to larger rivals like Salesforce and ServiceNow.
Shares of San Mateo, Calif.-based Freshworks have fallen about 26% this year.
CEO Dennis Woodside said part of the decision was the use of AI in products and engineering, and the automation of daily tasks across the business.
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“More than half of our code is written by AI,” Woodside said, adding that automation has reduced the “mechanical work that technology can handle.”
The company said the restructuring will affect divisions worldwide and has an estimated one-time cost of approximately $8 million. The Company had approximately 4,500 full-time employees as of December 31, 2025.
Woodside said savings from consolidating sales teams, reducing layers of management and automating work will be reinvested into Freshworks’ employee experience business, which includes Freshservices IT service management software.
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Layoffs.fyi, a website that tracks tech layoffs around the world, reported that 92,462 employees lost their jobs this year.
Separately, Freshworks said it expects second-quarter sales to be between $232 million and $235 million, according to data compiled by LSEG, with the midpoint above analysts’ average estimate of $232.7 million.
First-quarter revenue increased 16% to US$228.6 million, compared to expectations of US$223.24 million. Adjusted earnings were 11 US cents per share, below expectations of 12 US cents. Reuters
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