In a move reflecting ongoing shifts in the software industry, Freshworks has announced plans to reduce its global workforce by around 11%, impacting nearly 500 employees. The decision is part of a broader restructuring effort to streamline operations and accelerate AI-driven transformation.
The layoffs will affect both India and US teams, as the company adjusts its cost structure and workforce in response to changing demand trends in the software sector.
The Nasdaq-listed firm expects to incur one-time restructuring costs of about $8 million, with most of the charges to be recorded in Q2 2026. Chief Financial Officer Tyler Sloat said during the Q1 earnings call on May 6, “We announced some workforce changes we are making to the company in Q2 to consolidate overlapping go-to-market efforts, streamline our product development process, and apply AI and automation across our business.”
The restructuring highlights the growing role of artificial intelligence in shaping operations. CEO Dennis Woodside said that investments in AI over the past 1.5 years have significantly changed how products are developed and the scale of workforce required. “Over half of our code originates in AI today,” he said, noting improvements in development speed and efficiency.
This move aligns with a broader trend across the SaaS industry, where companies are focusing on automation, profitability, and efficiency amid slower enterprise spending. Freshworks is also the second US-based tech firm with a strong India presence to announce restructuring recently, after Cognizant introduced its AI-focused “Project Leap” programme.
This marks the third major round of layoffs by Freshworks in recent years. In November 2024, the company reduced its workforce by 13%, affecting around 660 employees. Earlier in 2023, it cut about 114 jobs in March and another 90–100 roles in June.
Freshworks currently has over 5,000 employees globally and has undergone management changes since 2024. Dennis Woodside was appointed President in September 2022 to lead global operations and strategy.
Despite the restructuring, the company reported a 16% year-on-year rise in Q1 revenue to $228.6 million. Its GAAP operating loss narrowed to $8.1 million from $10.4 million a year earlier. The net dollar retention rate improved to 105% in constant currency.
Freshworks now has over 1,648 customers generating more than $100,000 in annual recurring revenue, up 29% year-on-year. Customers contributing over $50,000 in ARR increased by 23%. The company also closed its 2 largest deals to date, including its first 7-figure ARR deal in the employee experience segment.
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