Freshworks Cuts 500 Jobs Amid AI Shift-Is “AI Reason” Really Valid?

When a company says “AI is changing operations,” most people hear one thing first- job cuts. Freshworks’ decision to reduce around 500 roles (about 11% of its workforce) has reignited that debate. The company has linked the move to restructuring, automation, and a stronger AI-focused operating model. At the same time, it has reported revenue growth, which makes the question sharper- if business is growing, is AI still a fair reason to lay off people?

This is not just a Freshworks story. It reflects a wider shift in software and SaaS companies worldwide. Many firms are investing heavily in AI while redesigning team structures, reducing overlap, and changing hiring priorities. So the real issue is not whether AI is being used, but how companies justify workforce decisions around it.

What Happened at Freshworks and Why It Matters

On 6 May 2026 reporting cycles, multiple outlets confirmed that Freshworks is cutting about 500 jobs globally. Company commentary framed this as part of a broader plan to streamline product development and go-to-market execution while increasing internal use of AI and automation. The company also indicated one-time restructuring costs expected in the next quarter.

What made this announcement stand out is timing. Freshworks also posted strong quarterly revenue growth, which means these cuts are not being explained as an emergency survival response. Instead, they appear to be a strategic redesign during growth. In simple words- the company is trying to become leaner and more AI-first at the same time.

For employees and job seekers, this sends a mixed signal. Growth at company level does not automatically guarantee role stability at individual level, especially when workflows are being rebuilt around AI tools.

Freshworks was co-founded in 2010 in Chennai, India, by Girish Mathrubootham and Shan Krishnasamy, originally named Freshdesk. Now Freshworks Inc. (NASDAQ: FRSH) is a publicly traded company, and it is owned by a diverse group of shareholders, including institutional investors, retail investors, and its founders. Dennis Woodside has been appointed as CEO and President in May 2024.

Is “AI” a Valid Layoff Reason?

From a business standpoint, companies can restructure if they believe technology changes role requirements. So yes, AI can be part of a valid restructuring argument. But “AI” alone should not become a blanket excuse. The quality of transition matters, role mapping, fair notice, severance support, redeployment options, and reskilling pathways.

From an ethics and workforce perspective, a responsible approach should include three checks-

• Was the role truly redundant after process redesign?
• Did the company attempt retraining or internal movement first?
• Was communication transparent and respectful?

If these checks are weak, employees and public observers see AI as a cover for cost-cutting rather than genuine transformation.

In India’s tech ecosystem, this debate is becoming more relevant. As AI coding assistants and automation layers improve, repetitive tasks are likely to shrink. But new roles are also being created in AI product management, model operations, workflow governance, security, and human-in-the-loop quality systems. So the challenge is not “AI vs jobs.” It is “job transition speed vs skill adaptation speed.”

Final Take: AI Is a Tool, Accountability Is a Choice

Freshworks’ layoffs are a reminder that AI adoption is now affecting workforce design in real time. For companies, AI can be a valid restructuring driver but only when paired with transparent process and fair employee treatment. For professionals, the message is equally clear i.e. role security will increasingly depend on adaptability, domain depth, and AI collaboration skills.

So, does AI excuse layoffs? Partly, yes if the business case is real and people processes are responsible. Otherwise, it risks becoming a convenient label for decisions that should still be judged on fairness and accountability.

Recently, Court of China presented ruling on AI layoff and Government of India also created new employment policy draft amid AI disruption to protect the workforce interest and worker protection against such layoffs which is a positive sign.

Facts Input- FE