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Freshworks CEO Dennis Woodside told YourStory that laying off 13% of the workforce last year was a difficult decision necessitated by the Nasdaq-listed firm’s shifting priorities and skill requirements.

“We did make some changes in the fall where we had to let a meaningful number of people go. Part of this is growing as a company. Some priorities you had a couple of years ago are no longer priorities, and the skills that some of your employees had are not necessarily the skills you need going forward,” Woodside said in an exclusive interaction with YourStory. 

Last year, Freshworks slashed 660 jobs as a changing competitive landscape demanded a relook in its strategy. SaaS companies globally are grappling with the rapid advancement of artificial intelligence. Many firms, including industry leader Salesforce and Atlassian, had to let go of employees, even as they restructured their teams to build AI capabilities. 

Industry observers note that traditional SaaS companies must now compete not only with each other but also with a new wave of AI-native startups offering similar solutions at lower costs, forcing established players to rethink their workforce composition and skill requirements.

“My perspective on this is—it’s not something we want to do. We certainly don’t want to do it going forward. We have got the right team and the right scale now. We are also hiring into different parts of the company than we trimmed,” he added, hinting that Freshworks has since resumed hiring. 

“It’s better for both the employee and the company to part ways,” he added. 

Woodside pointed out that Freshworks is not alone in undergoing organisational restructuring. “We’re not alone. Many tech companies have gone through the same thing. A lot of firms hired pretty rapidly during COVID, and have since scaled back.”

Responding to the remarks which were earlier made by Zoho boss Sridhar Vembu—criticising companies prioritising shareholder buybacks over employee retention—Woodside argued that his firm is much more focused on building a motivated workforce.

“Over the long run, happy employees generate happy customers. Happy customers generate revenue, and it all works. That’s how I think about things. We have to make sure we have the right team and the right employees. They have to be motivated. They have to know how to win. They have to want to win,” says Woodside. 

Vembu in a post on X said that a cash-rich firm engaging in buybacks while downsizing “should not expect any loyalty from their employees.” Although he did not name the company, his comments came just a day after Freshworks had announced job cuts last November. 

Pointing to other major SaaS players such as ServiceNow, Salesforce, Atlassian, and HubSpot—collectively worth over $500 billion in market cap—Woodside stressed that Freshworks needs top talent.

“So we have to be good, and our employees have to be good… and if they are, that’s going to create happy customers. Happy customers want to do more business with you, and that leads to revenue growth,” Woodside said. “So I really start with how we make our employees as effective and happy in their roles as possible. That’ll drive the rest of the equation.”