Nasdaq-listed SaaS firm Freshworks starts third round of performance-based layoffs: Report

Nasdaq-listed Software-as-a-Service (SaaS) firm Freshworks will go through another round of layoffs within its product, engineering and go-to-market (GTM) teams from the US location citing performance reviews, said a report on Thursday.

"The layoffs are more senior-level this time. Senior directors, product managers, and senior vice presidents of teams like GTM were let go. This is also mostly mid-market employees," Moneycontrol reported quoting a source.

Another employee of Freshworks said: “A senior vice president was laid off, he sits in the US... There was no announcement from the company yet. Some people left the team WhatsApp groups and later we got to know.”

Freshworks is currently undergoing its third wave of layoffs as it seeks to navigate macroeconomic challenges and implement cost-cutting measures.  

In March 2023, Freshworks announced its second round of layoffs, affecting approximately 114 employees, citing performance evaluations. In December of the previous year, the company reduced its workforce by 90 individuals, equivalent to 2 per cent workforce, in an effort to streamline expenses.

With a global workforce of approximately 5,000 employees, Freshworks is undertaking these measures to address the prevailing economic pressures and optimise its operations.

As the possibility of a global recession looms ahead, the SaaS ecosystem, both in India and worldwide, is experiencing the impact of slowing demand growth. In response, companies are taking steps to implement cost-cutting measures, including workforce reductions.

A recent report by Chiratae and Zinnov highlighted that SaaS founders are facing challenges such as delayed sales cycles, as customers exercise caution in their spending and focus on optimising cloud costs.

The report warned of a potential decline in customer demand in 2023, creating a recession-like scenario that could impact gross margins for SaaS companies.

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