Freshworks Layoffs: Impact on employees and the company's future

Freshworks has announced that it will lay off 660 employees, or 13% of its workforce, to streamline operations. Currently, the US-based IT company employs over 5,000 people. The company's employees in the US, India, and other regions will be affected by the job layoffs, according to a letter written by CEO Dennis Woodside. Freshworks released the letter in a regulatory filing that included the company's quarterly earnings and was submitted to the US Securities and Exchange Commission (SEC). To improve operational efficiency, Freshworks wants to align its staff with its strategic ambitions better. CEO Dennis Woodside underlined the necessity of streamlining operations to serve consumers better.

Freshworks hopes to increase operational effectiveness and better manage resources by cutting staff

The main reason for the layoffs is the need to reduce expenses and concentrate on key business areas. Freshworks hopes to increase operational effectiveness and better manage resources by cutting staff. The staff would be laid off in several places, including the US, India, and other foreign offices. Before this cut, Freshworks employed more than 5,000 people. CEO Dennis Woodside said in an email to staff that the reorganisation is required to increase operational effectiveness and better match talent with the company's strategic imperatives, which centre on customer experience (CX), employee experience (EX), and artificial intelligence (AI). The company laid off 90 workers in December 2022 and cut its personnel in March and June 2023. In the fourth quarter of 2024, Freshworks anticipates incurring expenses of between $11 million and $13 million for employee benefits and separation-related payments. By the end of December 2024, the organisation hopes to have finished this reorganisation. Freshworks has laid off employees before.

Operational losses have sparked questions about Freshwork's efficiency and sustainability

Freshworks is dedicated to its long-term goal of offering cutting-edge software solutions to companies worldwide, even in the face of layoffs. The business will fund customer service, product development, and strategic alliances. Even if the impacted workers find these layoffs unpleasant, Freshworks must take this action to secure its long-term expansion and viability. Subsequently going public on the NASDAQ in 2021, Freshworks has encountered difficulties. Although its stock did well initially, its value has significantly decreased. The stock, valued at about $46 during the initial public offering (IPO), has now fallen to about $13, indicating more general issues in the software-as-a-service (SaaS) industry. The recent layoffs coincide with Freshworks' impressive quarterly earnings, which showed a 22% rise in revenue to $186.6 million. However, operational losses have sparked questions about the company's efficiency and sustainability.

Since last year, Freshworks has experienced multiple rounds of layoffs

By the conclusion of the fiscal year ending on 31 December 2024, the corporation anticipates finishing its reorganisation plan. Since last year, the organisation has experienced multiple rounds of layoffs. ET revealed on 16 March 2023 that Freshworks implemented layoffs in June after implementing workforce cuts to improve organisational and operational efficiencies. About 60 of the 90 workers the corporation let go worldwide in December 2022 were from its India unit.

"The corporation committed to a restructuring plan (the plan) in November 2024 to increase operational efficiency and better match the company's skills with its strategic ambitions. In the letter, which Freshworks released in a regulatory filing with the US Securities and Exchange Commission (SEC), Woodside stated, "The company estimates that this will result in approximately 13% reduction in headcount and approximately $11 million to $13 million in charges in the fourth quarter of 2024, consisting primarily of cash expenditures for separation-related payments, employee benefits, and related costs."