Freshworks Cuts 500 Jobs in AI-Driven Restructuring

Freshworks, a San Mateo, California-based business software company, announced on May 5 that 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 stated that AI now writes more than half of the company’s code, with layoffs expected to result in about US$8 million in one-time charges, according to Reuters.

Company Scale and Financial Outlook

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.

Strategic Shift Toward Employee Experience

Freshworks is moving strategic attention toward its Employee Experience (EX) business. The company 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.

The spending is going to Employee Experience, built around Freshservice, the company’s IT service management software for internal workplace support teams. Freshservice ended 2025 with US$510 million in annual recurring revenue (ARR), up 26% from a year earlier. Employee Experience is now larger than Customer Experience, which ended 2025 with US$395 million in ARR, up 9% on a reported basis and 5% on a constant-currency basis.

Pattern Among Maturing SaaS Companies

Freshworks fits a pattern among maturing software-as-a-service (SaaS) companies that often slow spending in one product line to back another that is growing faster. 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.

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.

AI Performance Metrics

AI continues to play a central role in Freshworks’ product strategy. According to Freshworks’ Freshservice Benchmark Report 2025, Freddy AI Agent has a 65.7% ticket deflection rate, while Freddy AI Copilot users cut ticket resolution time by 76.6%.

FAQ

Q: Why is Freshworks cutting 500 jobs? A: Freshworks is restructuring around wider use of AI and automation. The company is also reallocating resources from its slower-growing Customer Experience business to its faster-growing Employee Experience business, which ended 2025 with US$510 million in ARR, up 26% year-over-year.

Q: How much of Freshworks’ code is now written by AI? A: According to CEO Dennis Woodside, AI now writes more than half of the company’s code.

Q: What is Freshworks’ Employee Experience product? A: Freshservice is Freshworks’ IT service management software for internal workplace support teams. It ended 2025 with US$510 million in ARR and is now the company’s larger business unit compared to Customer Experience (US$395 million in ARR).