Software manufacturer Atlassian is laying off around 10 percent of its workforce to have more funds for AI investments. “We are doing this to self-fund further investment in AI and enterprise sales while strengthening our financial profile,” explained CEO Mike Cannon-Brookes. In total, around 1600 people are losing their jobs.

Cannon-Brookes emphasized in his blog post that Atlassian does not follow the philosophy of replacing people with AI. At the same time, he also stated, “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.” Now it's about adaptation in his company.

Software sector primarily affected

In a filing with the US Securities and Exchange Commission (SEC), the company estimates that the layoffs will incur costs for severance payments and the like amounting to 225 to 236 million US dollars. The measures are to be completed by the beginning of the fourth quarter of the fiscal year.

According to a report by The Guardian, with around 900 job cuts, it primarily affects developers and other jobs in the software sector. The focus of the layoffs is therefore in the USA, Australia, and India. Specifically, according to The Guardian, it impacts about 640 employees in North America, 480 in Australia, and 250 in India. CTO Rajeev Rajan is also said to be stepping down at the end of March.

Is AI eating software companies?

Atlassian's stock price has recently fallen sharply in the wake of several stock drops at software companies. Since the beginning of the year alone, the stock has fallen by over 50 percent. At currently 75 US dollars, the highs of over 450 US dollars from 2021 are far away.

The market capitalization of software companies has come under pressure due to the market narrative that artificial intelligence threatens the business model of software companies. Atlassian is repeatedly considered one of the particularly threatened companies. The logic behind the fears: The classic Software-as-a-Service (SaaS) model with per-user licenses is losing momentum if AI, on the one hand, replaces employees and, on the other hand, also makes the creation of software easier.

CEO Cannon-Brookes, on the other hand, sees Atlassian as well-positioned and points, for example, to cloud growth of 25 percent in the past quarter and around 5 million monthly active users of the AI tool Rovo. However, Atlassian is not profitable and has been incurring losses since 2017.

(axk)