In a significant move that underscores the sweeping changes artificial intelligence (AI) is bringing to the software sector, Freshworks, a prominent business software company, announced plans to cut approximately 11% of its global workforce. This translates to around 500 to 660 jobs worldwide, marking the company’s strategic pivot towards increased automation and AI integration.

Freshworks, headquartered in San Mateo, California, is known for its robust customer engagement and IT service management solutions. Despite posting solid growth figures—reporting a 16% year-over-year revenue increase in the first quarter of 2026—the company is restructuring to align with how AI is reshaping software development and delivery.

CEO Dennis Woodside highlighted a key driver behind the layoffs: the adoption of AI in coding and automation. He revealed that AI currently writes more than half of the company’s code, particularly automating routine tasks in product development, engineering, and sales. This shift allows Freshworks to boost productivity and streamline operations, even as demand for its products remains steady.

This move by Freshworks reflects a broader trend in the software industry where AI enhances efficiency but also reduces the need for certain human roles, especially in routine, repetitive functions. The integration of AI tools means companies can deliver software faster and more efficiently, but it also raises questions about the future role of human labor in software creation and support.

The restructuring is expected to incur one-time charges estimated between $7 million and $9 million. Freshworks recently secured a significant $200 million funding round led by Bond Capital and Insight Partners, underscoring investor confidence in its AI-driven growth strategy despite the workforce reduction.

While layoffs often signify weakened business conditions, Freshworks frames its cuts as a productivity-driven adjustment, not a response to declining demand. This distinction is critical as many tech firms navigate the balance between embracing advanced AI technologies and managing human capital.

The changes at Freshworks also highlight competitive pressures in the broader customer relationship management (CRM) and IT service management markets. AI-native solutions are becoming a disruptive force, challenging traditional software suites offered by larger players like Salesforce and ServiceNow. Companies in this space must innovate rapidly or risk losing market relevance.

For investors and industry watchers, Freshworks’ actions offer a glimpse into the future of software companies — where AI plays an integral role not only in product innovation but also in operational efficiency and workforce structure. It’s a reminder that technological progress can drive growth but also requires companies to continuously adapt.

In summary, Freshworks’ decision to cut 11% of its jobs amid AI-driven changes is a vivid example of how automation and artificial intelligence are reshaping not just how software is built, but how software companies operate at their core. As AI continues to evolve, the software sector will likely see more transformations that blend innovation with workforce realignment.