Australian software company Atlassian has announced a major workforce reduction as it adjusts to the growing role of artificial intelligence in its operations. The company said it will cut around 1,600 jobs which represents about 10% of its total workforce as it reshapes its organisation to focus more heavily on AI development and enterprise sales.
The company explained that AI has reduced the need for some roles and the savings from these cuts will be used to increase investment in artificial intelligence capabilities. Out of the 1,600 employees affected about 480 or nearly 30% are based in Australia. CEO Mike Cannon-Brookes acknowledged the difficulty of the decision. “I believe this is the right decision for Atlassian. But that doesn’t mean it’s easy. Far from it,” he said. “We are doing this to self-fund further investment in AI and enterprise sales while strengthening our financial profile. We’re also changing the way we work and reorganising around our system of work to move faster.” He added that AI is not simply replacing workers but changing the type of skills required. “We fundamentally believe people and AI create the best outcomes. Our approach is not ‘AI replaces people’. But it would be disingenuous to pretend AI doesn’t change the mix of skills we need or the number of roles required in certain areas. It does. This is primarily about adaptation. We are reshaping our skill mix and changing how we work to build for the future.”
The announcement marks a shift from the company’s previous explanation during job cuts in July 2025 when 150 employees were laid off across countries including the United States Australia India Germany Canada and the United Kingdom. At the time the company said improvements in its platform had reduced customer support needs which left more staff than required. The company also responded to claims that those roles were being replaced by AI saying that while AI was embedded in its customer service tools the layoffs were mainly because customers needed less help with its products.
The latest cuts come during a challenging period for software companies often referred to as the “SaaSpocalypse.” The downturn intensified after Anthropic released updates to its Claude AI which triggered a major selloff in software stocks. The S&P 500 software and services index lost about $1.4 trillion in value. Atlassian was among the hardest hit with its share price dropping 66% over the last 12 months and nearly 80% from its all-time high while falling by half in 2026 alone. Despite the decline Cannon-Brookes said he remains confident about the company’s future with AI. “I’m convinced AI is great for Atlassian. Others think software is dead,” he told shareholders. He also said there is strong potential for partnerships between Atlassian’s tools and AI platforms including Cowork. While he admitted feeling “frustrated” about the share price fall he said he remains “incredibly bullish” on the opportunities created by AI.
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