SaaS Unicorn Freshworks Lays Off 90 Employees Amid Macroeconomic Pressures

Amid an industry-wide downturn, Nasdaq-listed enterprisetech major Freshworks has laid off ‘less than 2%’ of its workforce as part of an organisational reshuffle. 

“To fuel our business growth, we made organisational changes to create better alignment across the company. We shifted some existing roles in product, marketing and sales to support more critical initiatives and reduced the need for a small number of others – less than 2% of our workforce. Freshworks did not do a company-wide layoff,” said a Freshworks’ spokesperson.

As many as 90 employees have been fired across sales, marketing, and engineering verticals. However, there is no clarity on the country-wise breakdown of the retrenchment data.

As per the company’s website, the SaaS platform employs more than 4,000 people across its offices in India, the US, Europe, and Australia.

Sources reportedly said that the company has already paid severance packages and other settlements to the impacted employees and put many sales personnel on a Performance Improvement Plan (PIP).

Besides, the firm has also purportedly merged its HR management system, Freshteams, with another product.

SaaS Space Under Pressure

The Nasdaq-listed firm joins a growing list of SaaS companies that have laid off employees amid the ongoing downturn. Chennai-based SaaS unicorn Chargebee laid off 10% of its workforce last month stating cost-cutting measures and macroeconomic conditions. 

In September, SaaS platform Clear fired 190-200 employees, while logistics SaaS startup FarEye laid off 250 employees across multiple verticals in June. 

The restructuring exercises are largely the result of a mix of macroeconomic factors such as inflationary pressures, rising interest rates and lower spending on software globally. 

During the company’s quarterly financial call in September, chief executive officer (CEO) Girish Mathrubootham had said that Freshworks was not immune to a slow economy and was witnessing steady growth in some markets. 

In the third quarter of FY22, Freshworks reported a consolidated revenue of $128.8 Mn, up 37% year-on-year (YoY). During the same period, the company narrowed its losses to $58.3 Mn from $107.4 Mn in the same quarter last year. 

Not just this, Freshworks also faces a potential lawsuit that alleges that the SaaS major did not reveal the full extent of business challenges it was facing during its IPO, and, as such, misled investors. 

Overall, Indian startups continue to dominate the global SaaS ecosystem on account of a big talent pool, better customised offerings and cheaper labour. This has pushed the Indian enterprisetech market to newer heights. 

A report estimates that the Indian SaaS sector is well on its way to generate revenues in the range of $50 Bn to $70 Bn by 2030. The report adds that Indian SaaS companies will likely dominate 4%-6% of the global market by 2030.