Freshworks Announces Layoffs Amid AI Transformation

Freshworks has announced layoffs of approximately 500 employees, representing 11% of its global workforce. This decision comes as the Nasdaq-listed SaaS company implements changes to its operations, in response to the increasing integration of artificial intelligence within the software sector. The staff reductions will occur worldwide and are anticipated to incur one-time restructuring costs of close to $8 million. As of December 31, 2025, Freshworks employed around 4,500 people.

Reasons Behind the Layoffs

According to CEO Dennis Woodside, the layoffs are partly motivated by the company’s growing reliance on AI, both in product development and internal operations. Woodside noted that now over half of Freshworks’ coding is produced with the help of AI tools, which has considerably sped up development timelines and decreased the need for repetitive manual tasks.

Strategic Changes and Investments

During a recent earnings call, Woodside explained that Freshworks has streamlined its go-to-market strategy and adjusted team structures to focus more on Employee Experience (EX). He mentioned that the company has made significant investments in AI and automation across various sectors to enhance efficiency and response times.

Future Plans for Employee Experience

Freshworks intends to reallocate resources from the restructuring into its Employee Experience (EX) segment, particularly through Freshservice, its IT service management platform.

Previous Layoffs and Company Performance

This event marks Freshworks’ second significant layoff within less than two years. In November 2024, the firm let go of about 660 employees, roughly 13% of the total workforce, as part of a wider restructuring aimed at improving operational efficiency and leading an AI-driven transformation.

Recent Financial Results

In conjunction with the layoffs, Freshworks disclosed its most recent quarterly performance. Revenue for the first quarter of 2026 rose by 16% compared to the previous year, reaching $228.6 million. This surpassed analysts’ expectations, which were set at $223.24 million. The company anticipates second-quarter revenues to fall between $232 million and $235 million, slightly exceeding market forecasts.