Freshworks cuts 11% of workforce as AI writes over half its code, reshaping software development

Freshworks to cut 11% jobs as AI reshapes software sector

May 5 (Reuters) - Freshworks (FRSH.O), opens new tab said on Tuesday it would cut 11% of its workforce, or about 500 jobs, as the business-software company grapples with an industry being reshaped by artificial intelligence. Shares of the company were down around 5% in extended trading. The cuts are the latest tied to AI in the software sector as companies race to automate work and reshape products around the technology while trying to offset its steep costs. Peer Atlassian (TEAM.O), opens new tab, last month, said it would slash roughly 10% of jobs. At the same time, AI tools from ⁠the likes of Anthropic are seen as potential existential threats to traditional software makers, hammering shares of companies ranging from Freshworks to larger rivals such as Salesforce (CRM.N), opens new tab and ServiceNow (NOW.N), opens new tab. The San Mateo, California-based company's stock had declined about 26% this year. CEO Dennis Woodside told Reuters the decision was driven partly by AI use in product and engineering, as well as automation of routine work across the business. "Over half of our code is written by AI," Woodside said, adding that automation had reduced "rote work that technology can ⁠take care of." Freshworks said the restructuring would affect about 500 roles across departments globally and incur one-time charges of about $8 million. As of December 31, 2025, it had about 4,500 full-time employees. Woodside said savings from merging sales teams, reducing management layers and automating work would be ⁠reinvested in Freshworks' Employee Experience business, which includes its IT service management software Freshservice. Layoffs.fyi, a website that tracks tech job cuts around the world, reported that 92,462 employees have lost their jobs ⁠this year. Separately, Freshworks said it expects second-quarter revenue between $232 million and $235 million, the midpoint of which is above analysts' average estimate of $232.7 million, according to data compiled ⁠by LSEG. In the first quarter, revenue rose 16% to $228.6 million, compared with estimates of $223.24 million. Adjusted profit came in at 11 cents per share, missing estimates of 12 cents per share. Reporting by Anhata Rooprai in Bengaluru; Editing by Sahal Muhammed Our Standards: The Thomson Reuters Trust Principles., opens new tab

Why Freshworks is laying off 11% of its workforce as AI takes over the majority of coding work

Freshworks has become the latest vendor to join the AI-related job cutting roster, with plans to axe 11% of its workforce, despite a 16% year-on-year revenue rise to $228.6 million in its latest quarter. The AI impact is coming largely from the engineering side of the business, with over half of coding work now delivered by AI. The lay-offs, totalling around 500 roles worldwide, will incur an $8 million restructuring charge, the majority of which hit will be taken in the current quarter. There are a couple of reasons for making the restructuring decision now, argued CEO Dennis Woodside: The first was we recently consolidated our go-to-market strategy. We had, I wouldn't say equal, but a more equal focus on inbound versus outbound. We're increasingly focusing on that EX (Employee Experience) business, which is primarily an outbound motion and focusing on acquiring CX (Customer Experience) customers with better unit economics. So that's led us to re-balance our teams more towards EX and to rebalance our spend more towards EX. And then really to run that CX business to drive profitability, drive cash that we're re-investing back in EX. I think the second is we've, over the last year, one-and-a-half years, invested a lot in changing the way we build product to embed AI into the development process, which has resulted in much shorter cycle times. About over half of our code is originated in AI today, and like many other software companies, that is definitely changing how we build products, how fast we can build product and the amount of people that we need to build products. Throughout the whole business, we've been investing in automation and AI to streamline the way we do business, to move faster. All of those things contributed to the decision to actually do the restructuring. In Q1 '26, Freshworks also slipped back into the red, reporting an operating loss of $8.1 million after turning a profit of $39.7 million in the preceding Q4. Despite this, there were highlights during the quarter: Woodside said customer momentum was particularly strong for EX: We just continue to see real momentum on that EX business and the move upmarket is working. And you see that in a couple of different ways. If you look at our growth of accounts that are spending more than $100,000 with us, that's up 29% year-over-year. We had our biggest deal ever, biggest land ever, a large nutrition company that was a 10-year customer of one of our competitors, that is moving over to us for all the reasons that we've talked about in the past - enterprise-grade scale, much faster time to value, easier to manage the platform, AI capabilities. We had actually our second largest land ever with a large healthcare provider, very similar story. So the upmarket motion just continues to drive the overall EX business. He pointed to some other customer wins and expansions in Q1: Piedmont Healthcare selected Freshservice over our largest competitor, citing our significantly lower total cost of ownership, faster implementation and enterprise capabilities. Reed, the UK's #1 specialist recruitment company, moved to Freshworks to achieve a faster and more collaborative enterprise IT experience. Amerisure, a commercial insurance provider and EX customer, has been able to transform service delivery within a single platform using Freshservice's AI-driven workflows and Freddy Insights. With Freshservice for business teams, the use cases expanded beyond IT into legal, HR, underwriting and marketing, saving thousands of hours in 2025 alone and cutting employee onboarding resolution time by 97%. He added that he saw no slowdown in customer enthusiasm for AI: We don't see any AI anxiety slowing deals or impacting deals. In fact, most of our larger deals now are coming in with an AI component. AI is core to the pitch. The discussion on road map, all of that matters for the customers that are coming over. But at the same time, customers are coming over not just for AI. They're coming for the full platform. It's an interesting time to take the hit on the negative vibes that the layoff announcement will have. Clearly Freshworks is hardly alone here - the tech landscape is littered with the corpses of the AI-inflicted terminations - but with the Freshworks faithful set to gather in New York for the firm's annual Refresh customer conference, some morale management may be on the agenda. More from Freshworks next week.

Freshworks lays off 500 employees; Q1 revenue grows 16% to $228 million - The Economic Times

Freshworks announced significant job cuts, reducing its workforce by 11% or approximately 500 employees. This move comes as the business software company navigates industry-wide disruptions driven by rapid advancements in artificial intelligence. The company cited AI's role in product development and automation of routine tasks as key factors.Software-as-a-service company Freshworks said on Wednesday it will lay off 11% of its global workforce, affecting nearly 500 employees, as it ramps up the use of artificial intelligence across its business. The Nasdaq-listed firm also reported a 16% year-on-year increase in revenue for the January-March quarter to $228.6 million, ahead of analyst estimates of $223.24 million. The latest layoffs mark Freshworks' first major workforce reduction since 2024, when it cut around 13% of its staff, or about 660 employees globally, as part of efforts to streamline operations. The Chennai-and San Mateo, California-based enterprise software company reported a GAAP operating loss of $8.1 million in Q1 2026, narrowing from a loss of $10.4 million a year earlier. It had briefly turned profitable in Q4 2025, posting a GAAP operating profit of $39.7 million, before slipping back into a loss this quarter. The company said it expects to incur a one-time restructuring cost of $8 million, which will be accounted for in the April-June period. Speaking to ET, CEO Dennis Woodside said the company does not plan further layoffs but will focus on maintaining a leaner team. "We will be very thoughtful about any additional headcount...or backfilling existing roles, and about how we stay fast and nimble while taking advantage of AI," he said. Woodside said AI has been an accelerant for Freshworks and is reshaping how software is built. "You no longer need massive product requirement documents. You can quickly create interactive prototypes in tools like Figma or Lovable, show them directly to customers, iterate rapidly and then move those into code generation workflows," he added. He said engineers can now "simply get more done than before," but added that companies will need a different type of engineer -- those comfortable working with AI-native workflows. On broader adoption, Woodside said he expects larger software companies to become leaner and more efficient, while smaller firms scale without significantly increasing headcount. AI has reset expectations across the SaaS sector, pushing investors to question pricing power, product defensibility and long-term margins for non-AI-native companies. This has led to valuation compression across the sector, with market capitalisations of several traditional SaaS firms declining despite steady operating performance. "There's market noise, and then there's what customers are actually doing. For us, that reality is clear...we're continuing to win larger customers across both customer experience and employee experience," Woodside said. "AI is an accelerant in most new deals. In more than 60% of our large deals, it's a paid component from day one and is also driving expansion." He added that customers are not buying purely for AI. "They need a system to manage interactions across employees, along with full visibility into their software and hardware estate. For IT leaders, that's critical for security and audit purposes." Freshworks' share price has fallen from a high of $16.14 to a low of $6.79. On May 5, the stock closed at $9.19 on Nasdaq, up 2.34% from the previous session. The company, which listed in 2021 at a $10 billion valuation, now has a market capitalisation of about $2.6 billion - nearly 80% below its peak.

Freshworks Cuts 11% Of Workforce As CEO Says 'Over Half Of Our Code Is Written By AI' - Freshworks (NASDA

AI-Driven Restructuring Sparks 500 Job Cuts On Tuesday, Freshworks said it will lay off about 11% of its workforce, or roughly 500 employees, as it restructures operations in response to rapid AI adoption across the tech industry, reported Reuters. The company, which provides customer service and IT support software, said the cuts will span global teams and are aimed at reducing management layers and automating routine work. CEO Dennis Woodside told Reuters the restructuring reflects how AI is already changing internal operations. "Over half of our code is written by AI," Woodside said, adding that automation has significantly reduced "rote work that technology can take care of." The company also pointed to similar moves across the sector, noting peers such as Atlassian Corp. (NASDAQ:TEAM) have announced layoffs as software firms race to integrate AI while controlling costs. AI Drives Tech Layoffs He explained that increasing investment in AI systems had reduced funding available for staff, with Meta expected to cut about 10% of its workforce. Engineering positions were among the most affected, with internal filings showing they accounted for a large share of job reductions in key U.S. states. Perplexity AI CEO Aravind Srinivas took a more optimistic view, saying AI-driven layoffs could push workers to leave unfulfilling roles and start new businesses. While acknowledging job displacement, he said AI tools created new opportunities for skill-building and entrepreneurship. Billionaire investor Mark Cuban also said AI would transform jobs but emphasized that workers who adapt quickly could stay competitive, comparing the shift to the early personal computer era. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.