Freshworks to cut 500 jobs in AI-led restructuring

Freshworks, a San Mateo, California-based business software company, said on May 5 it will cut 11% of its workforce, or about 500 jobs globally, as it restructures around wider use of AI and automation.

Chief executive Dennis Woodside said AI now writes more than half of the company’s code, while the layoffs are expected to result in about US$8 million in one-time charges.

Freshworks had about 4,500 employees at the end of 2025. The company forecast second-quarter revenue of US$232 million to US$235 million after reporting first-quarter revenue of US$228.6 million.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

Layoffs track a shift toward EX, with AI savings as one factor

Freshworks is moving attention toward its Employee Experience (EX) business. The company says it is not leaving customer experience behind 1.
Freshworks expects slow “mid-single digit” growth in Customer Experience (CX). “We’re running CX lean to enable us to invest in that EX opportunity,” said Dennis Woodside, CEO, Freshworks 1.
That spending is going to Employee Experience, built around Freshservice, the company’s IT service management software for internal workplace support teams. It ended 2025 with US$510 million in annual recurring revenue (ARR), up 26% from a year earlier 1.
EX is now larger than CX, which ended 2025 with US$395 million in ARR, up 9% on a reported basis and 5% on a constant-currency basis 1.

Mature software as a service (SaaS) companies often move money to the faster-growing unit

Freshworks fits a pattern among maturing software-as-a-service (SaaS) companies. They often slow spending in one product line to back another that is growing faster 1.
The company is pushing deeper into IT service management, where it competes with ServiceNow, a larger enterprise software company focused on workplace and IT operations, and Atlassian, whose software is widely used by technology and support teams 2.
Investor pressure adds weight. Freshworks’ stock has trailed the S&P 500, a widely followed index of large US companies, over the past year, which raises the appeal of better margins and tighter focus on faster-growing areas 3.
AI still matters. Freshworks’ Freshservice Benchmark Report 2025 says Freddy AI Agent has a 65.7% ticket deflection rate, while Freddy AI Copilot users cut ticket resolution time by 76.6% 4.