Like most announcements, it was made on a Tuesday, after the market closed, in a paragraph that was so dense you had to read it twice. 11% of Freshworks’ employees would be let go. 500 or so. In prolonged trading, the stock dropped more than 8%, a reaction that suggests investors had been anticipating something, but perhaps not this.
However, the number isn’t what makes the Freshworks story compelling. The CEO of the company, Dennis Woodside, stated almost casually that artificial intelligence now writes more than half of Freshworks’ code. When spoken aloud in plain English, the line causes discomfort. It shifts the discussion of AI and employment from the impersonal to the intimate. On Wednesday morning, someone in San Mateo, Chennai, or Bangalore opened their laptop and discovered that the machines were no longer a threat. They were the cause.
In the traditional sense, Freshworks is not a failing business. The revenue continues to rise. By year’s end, Freshservice, its IT service management product, is expected to account for nearly 60% of revenue, growing at a rate of 27% annually. This is a company in motion according to the outdated metrics that were used to characterize a robust SaaS enterprise. And yet here we are, cutting staff for the third time in recent memory, second under Woodside, who assumed the top position in May 2025. The leadership team seems to be anticipating a structural change that they can already see approaching, rather than responding to weakness.
The same uncomfortable discussion is taking place in the larger software industry. Last month, Atlassian laid off about 10% of its employees. As generative AI tools start to nibble at the edges of enterprise applications that, until recently, seemed unbreakable, investor patience is thinning for Salesforce and ServiceNow. Analysts now frame tools from companies like Anthropic—that is, the technology driving this change—as possible existential threats to the traditional SaaS playbook. It’s an odd moment. The business model is being rewritten by the same technology that is writing the code.
The Freshworks announcement is notable for how at ease the language has become. Reducing “rote work that technology can take care of,” consolidating sales teams, flattening management levels, and reinvesting savings in the Employee Experience division were all topics covered by Woodside. The underlying idea has changed, but the vocabulary is familiar—restructuring spreadsheets typically sounds this way. Businesses aren’t making layoffs as a result of a collapse in demand. Because the work itself is evolving beneath them, they are laying people off.
Junior engineers and quality assurance professionals, who previously entered the field through formal training programs, are particularly anxious. Students from Freshworks’ own academy, FSSA, have reportedly been told to look elsewhere, according to reports from India. As this develops, it’s difficult to ignore the paradox: a business that prides itself on developing young talent is now allowing that pipeline to thin out because AI excels at entry-level work.
Nobody is certain yet if this is the right decision. Announcements about restructuring always sound clear in the moment but unclear later. With its automation wager confirmed, Freshworks might become sharper and leaner. Or it might find that the people you let go had more institutional knowledge than the org chart indicated, as some software companies have done in the past. Layoffs claims. Just so you know, over 92,000 technology workers have already lost their jobs worldwide this year. Against that background, five hundred more seems almost insignificant. Nearly.
The AI era might just require fewer workers. Another possibility is that the industry is overcorrecting, confusing a tool with a strategy. In any case, the Freshworks announcement—a CEO publicly stating that the machines are now writing the code—will be remembered more for its candor than for its scope. The rest of the software industry is paying close attention. They must.
