Freshworks to cut 11% jobs as AI reshapes software sector

May 5 (Reuters) – Freshworks said on Tuesday it would lay off 11% of its workforce, or about 500 people, as the business software company grapples with an industry being reshaped by artificial intelligence.

The outages are the latest AI-related disruptions in the software industry as companies race to automate jobs and reshape products around the technology, while trying to offset higher costs. Peer Atlassian said last month it would cut about 10% of jobs.

At the same time, AI tools from companies like Anthropic are seen as potential existential threats to traditional software makers, impacting the stocks of companies ranging from Freshworks to larger rivals like Salesforce and ServiceNow.

Shares of the San Mateo, California-based company have fallen nearly 26% this year.

The decision was driven in part by the use of artificial intelligence in product and engineering, as well as the automation of routine work across the business, CEO Dennis Woodside told Reuters.

“More than half of our code is written by AI,” Woodside said, adding that automation reduces “the rote work that technology can handle.”

Freshworks said the restructuring will affect about 500 roles in departments worldwide and will incur one-time charges of about $8 million. It had approximately 4,500 full-time employees as of December 31, 2025.

Savings from consolidating sales teams, reducing management layers and automating work will be reinvested into Freshworks’ Employee Experience business, which includes IT service management software Freshservice, Woodside said.

Layoffs.fyi, a website that tracks layoffs in the tech industry worldwide, reported that 92,462 employees lost their jobs this year.

Separately, Freshworks said it expects second-quarter revenue of $232 million to $235 million, according to data compiled by LSEG, with the midpoint of that above analysts’ average estimate of $232.7 million.

Revenue in the first quarter rose 16% to $228.6 million, compared to estimates of $223.24 million. Adjusted earnings came in at 11 cents per share, below estimates of 12 cents per share. (Reporting by Anhata Rooprai in Bengaluru; Editing by Sahal Muhammad)