The Chennai/US-based IT company Freshworks on Wednesday announced a 13 per cent reduction in its global workforce, which will impact 660 employees, CEO & President, Dennis Woodside, said in an email to employees. A majority of its employees work in India.

In November 2024, the company committed to a restructuring plan (the Plan) to better align its talent with its strategic priorities, and to improve operating efficiency. The move is expected to result in $11 million to $13 million in charges in the fourth quarter of 2024, consisting primarily of cash expenditure for separation-related payments, employee benefits and related costs.

Freshworks has over 5000 employees globally. The decision has impacted around 500 people, which is approximately 12 per cent of the India workforce. The decision impacted approximately 16 per cent of employees in the US. The evaluation and consultation process is commencing in Europe, Australia and other parts of the world, according to company sources.

The plan will be substantially complete by the end of the fiscal year ending December 31, 2024, says a company filing with the US Securities and Exchange Commission.

“To deliver on our strategic priorities around EX, AI and CX, we are realigning our global workforce, putting us on a path to have an even bigger impact for our customers. As a result of this, we have made the decision to reduce our headcount by 13 per cent,” he said.

Making the decision

“There’s simply no good time to make a decision like this that affects people’s lives and it’s my responsibility to be transparent about how and why this decision was made. I am immensely grateful to those who will be leaving for their significant contributions to Freshworks. While this is likely an unexpected way to end your time here, I hope you leave feeling proud of the impact you’ve had,” he said.

“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.

We began by combining teams focused on Customer Experience (CX) products, including support, sales and marketing, and reallocating people and investments to prioritise our fastest growing Employee Experience (EX) business. These decisions were made thoughtfully and carefully to set a strong foundation for our future,” the letter said.

“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.”

Informing impacted employees

Employee notifications happen on different timelines in each country. In the US and India, employees whose roles are being impacted will receive a meeting invitation called ‘Transition Discussion’. These conversations will happen on Wednesday in the US and Thursday in India. Departing employees can expect to have a conversation with a leader in their organisation. In countries outside of the US and India, this process may take longer due to local laws and practices.

Supporting our impacted employees

“Transitioning employees may receive financial, medical and career support, including severance pay that’s based on years of service, continued healthcare coverage and Employee Assistance Program support, career transition support as they look for their next opportunity, and immigration support, where applicable. How we do this will vary based on local laws and customs,” he said.

Reduced loss

Freshworks reported reduced net loss of $30 million for the third quarter ended September 30, 2024 as against $31 million in the same quarter last year. Total revenue was up 22 per cent to $186.6 million ($153.6 million).

The financial numbers for 2024 include the results of Device42, Inc. for the period after the closing of the acquisition, says a release.

During the quarter, the company said the number of customers contributing more than $5,000 in ARR was 22,359, an increase of 14 per cent year-over-year. Net dollar retention rate was 107 per cent compared to 106 per cent in the second quarter of 2024 and 108 per cent in the third quarter of 2023.

Some of the new customers added in the quarter include Republic Airways and University of Oxford. The company unveiled Freddy AI Agent for Customer Experience (CX) and Employee Experience (EX) optimized for speed to value and increased productivity.

Freshworks appointed Murali Swaminathan as the Chief Technology Officer.

The company has raised its fourth quarter revenue in the range of $187.8 to $190.8, and its full-year revenue to $713.6 million to $716.6 million, the release said.

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