CRM software company Freshworks is laying off approximately 500 employees, representing 11% of its workforce, as it contends with AI's impact on the business-software sector. The company's stock has declined roughly 26% in 2026.
Freshworks announced the workforce reduction on Tuesday, citing the need to navigate shifting market dynamics driven by artificial intelligence adoption.
The layoffs affect around 500 positions across the company, which provides customer relationship management software to businesses. Freshworks joins a growing list of software companies reassessing their headcount and operational strategy in response to AI integration changing how customers use and purchase their products.
The company's stock performance reflects broader investor concerns about AI's disruptive potential in the software sector. FRSH shares have lost approximately 26% of their value during 2026, suggesting market skepticism about the company's ability to compete and maintain growth amid technological shifts.
Freshworks, which went public in 2021, has positioned itself as a provider of customer engagement software across sales, support, and marketing functions. The company's restructuring suggests management believes a leaner operation will better position it for profitability and sustainability in an AI-driven market.
The CRM software market remains competitive, with larger players like Salesforce and HubSpot also adapting to AI capabilities. Many software companies are integrating AI features to enhance productivity and decision-making for customers, potentially reducing the need for traditional software solutions or requiring fewer employees to maintain existing products.
Freshworks' move reflects a pattern among SaaS and enterprise software companies weighing efficiency against the costs of developing AI-integrated products. The company has not disclosed specific details about which departments or regions will be most affected by the cuts or timelines for implementation.
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