Freshworks to lay off 500 employees in rejig to focus more on AI

Chennai: Software service company Freshworks will lay off around 500 employees, or roughly 11% of its workforce, citing plans to ramp up investments in AI-focused product development and related business areas.It was part of its restructuring plan to streamline efforts and product development process and increase AI and automation usage across the business, the Nasdaq-listed company said in exchange filings. It estimates about 11% reduction in headcount and approximately $7 million to $9 million in charges in the upcoming quarter. Dennis Woodside, chief executive and president of Freshworks, in an analyst call, said the restructuring is made to focus and invest more on the employee experience (EX) business, which is growing at 27%. "We consolidated our strategy, increasingly focusing on the EX business and focusing on CX acquisition with better unit economics. That led us to rebalance our teams and spend more toward EX, and to run the CX business to drive profitability and cash," he said. "Over half of our code originated in AI today, and that is changing how we build products and the number of people that we need," he added.Meanwhile, Freshworks's revenue for the first quarter of 2026 increased 16% to $228.6 million, compared to $196.3 million in the first quarter of 2025. The loss (GAAP) from operations was $8.1 million, representing an operating margin of -3.5%. Woodside further added that Freshworks is focused on delivering long-term value to shareholders and customers through sustainable growth and increased profitability.