SaaS giant Freshworks has announced a significant workforce reduction, cutting approximately 13% of its global headcount, impacting 660 employees out of its 5,000-strong workforce. The company, which recently reported a 22% growth in revenue, cited the decision as part of its focus on strategic growth areas, including AI, Employee Experience (EX), and Customer Experience (CX) offerings.
Dennis Woodside, the CEO of Freshworks, shared the news with employees in an internal memo, emphasizing the company’s commitment to simplifying operations and focusing on the most critical drivers of the business. “One of the first things our Board of Directors asked me to do when I became CEO five months ago was to assess our strategy and ensure we’re focused on the most critical drivers of our business. This work resulted in our three strategic imperatives (our Employee Experience business, AI and our Customer Experience business) and gave us a clear view into where we need to simplify the way we work and operate more efficiently,” Woodside stated.
The layoff decisions come as part of the company’s broader efforts to prioritize its key growth areas, namely Employee Experience, AI, and Customer Experience. Freshworks aims to realign its workforce to better serve these priorities and create more scalable and efficient operations. “To add more focus on our EX, AI, and CX priorities, we are realigning our global workforce, putting us on a path to have a bigger impact for our customers. We’re making these changes while our business is profitable and our AI-powered products are providing increasing customer value. We believe this will help us accelerate our growth and simplify the way we work, so that we’re running Freshworks in a way that’s efficient and scalable,” Woodside explained.
The company has committed to providing significant support to affected employees, including severance packages, extended healthcare coverage, career transition services, and immigration assistance. Employees in the U.S. and India are expected to be notified in the coming days, with the notifications following regional legal timelines. In addition, impacted employees will be offered a “Transition Discussion” meeting.
Freshworks’ latest initiatives include the launch of Freddy AI Agent, an autonomous service agent designed to improve both CX and EX by streamlining workflows. The AI agents, which can be deployed in just minutes, have reportedly resolved an average of 45% of customer support requests and 40% of IT service inquiries. This AI-driven approach is part of Freshworks’ broader strategy to enhance efficiency and deliver greater value to customers.
Despite the workforce reduction, Freshworks remains profitable, reporting a 22% year-on-year revenue growth for the third quarter of 2024, reaching $186.6 million, up from $153.6 million in the same period last year. The company has also reduced its losses by 3.55%, posting a loss of $29.9 million compared to $31 million in Q3 2023. The company’s focus on AI-powered products and streamlined operations is expected to drive continued growth and profitability in the future.
