Freshworks will cut about 11% of its workforce — roughly 500 jobs — as the San Mateo-based customer service and IT support software company accelerates automation and reshapes its business around artificial intelligence. The company said the reductions, which will hit departments globally, are intended to lower costs and free up resources to invest in product areas where it sees growth potential.
CEO Dennis Woodside told Reuters the move reflects how deeply AI has been integrated into Freshworks’ operations. "Over half of our code is written by AI," he said, adding that automation has taken over "rote work that technology can take care of." The restructuring, which the company said will incur about $8 million in one-time charges, follows a strategy of merging sales teams and trimming management layers to create leaner operations.
Freshworks had about 4,500 full‑time employees as of Dec. 31, 2025, meaning the layoffs will affect a significant slice of its staff. The company said savings from the cuts will be reinvested in its Employee Experience business, including Freshservice, its IT service management product. The company did not provide a detailed breakdown of roles or regions affected.
Investors reacted sharply: Freshworks shares tumbled more than 8% in extended trading after the announcement and the stock has fallen about 26% so far this year. The cuts come amid a wave of job reductions across the software sector as vendors race to incorporate generative AI into products while managing the technology’s substantial costs. Peers including Atlassian recently announced headcount reductions of roughly 10%, and industrywide tallies show tens of thousands of tech roles eliminated this year.
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Despite the headcount reduction, Freshworks reported solid top-line momentum in the first quarter. Revenue rose 16% to $228.6 million, beating the $223.24 million analysts had expected, though adjusted profit was 11 cents per share, slightly below the 12-cent estimate. For the second quarter, the company forecast revenue between $232 million and $235 million; the midpoint is marginally above the analysts’ consensus of $232.7 million, according to LSEG data.
Freshworks’ announcement underscores a tension facing many software companies: AI promises faster feature development and efficiency gains, but also threatens to cannibalize traditional product value and compress margins as competition intensifies. The company singled out advances in AI tools from firms such as Anthropic as part of a broader competitive landscape reshaping how enterprise software is built and sold.
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The cuts mark a new phase for Freshworks as it leans into AI-driven engineering and product changes while trying to preserve growth. Management will now balance near-term savings and restructuring charges against reinvestment plans aimed at expanding its Employee Experience offerings, a segment the company identified as a strategic priority.
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