Atlassian to cut roughly 10% jobs in pivot to AI

By Jaspreet Singh

March 11 (Reuters) – Atlassian said on Wednesday it would lay off around 10% of its workforce, or 1,600 employees, to push into artificial intelligence and enterprise sales.

Shares of the enterprise software company rose nearly 2% in extended trading after Atlassian said it plans to “rebalance” its resources to focus on the “future of teamwork in the AI era.”

The company said the majority of impacted employees are in North America, amounting to 40%, followed by 30% in Australia and 16% in India. It expects to incur about $225 million to $236 million in charges related to the layoffs and office space reductions.

“Our approach is not ‘AI replaces people.’ But it would be disingenuous to pretend AI doesn’t change the mix of skills we need or the number of roles required in certain areas. It does,” CEO Mike Cannon-Brookes said in a memo to employees.

The move comes as investors increasingly scrutinize software firms amid fears that advances in AI could disrupt traditional software business models, though some analysts say the sector-wide selloff may be an overreaction.

Top executives at the World Economic Forum’s annual meeting in January had said that while jobs would disappear, new ones would spring up, with two telling Reuters that AI would be used as an excuse by companies that were already planning layoffs.

Atlassian, whose shares were down around 33% last year, derives a majority of its revenue from its collaboration tools, including Jira software for planning and project management and Confluence for content creation.

“Software companies such as Atlassian have an opportunity to make their business more efficient by adopting AI tools, especially within their product development. By reorganizing that way they can reduce the resources necessary to deliver their current business and grow more profitably,” said D.A. Davidson analyst Gil Luria.

The company said Rajeev Rajan will step down as chief technology officer, effective March 31.

Atlassian expects the restructuring plan to be substantially complete by the end of the fourth quarter. It expects a smaller number of job cuts across Europe, the Middle East, Africa, Japan and the Philippines.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Sahal Muhammed and Alan Barona)