Significant Cut: Atlassian Reduces Workforce by 1,600 Employees in Preparation for AI Initiative

Atlassian, the well-known software development company, recently made headlines by announcing a significant restructuring that involves laying off approximately 10% of its workforce, which translates to about 1,600 employees. Coupled with this decision is the replacement of its Chief Technology Officer as part of a broader strategy focusing on increased investment in artificial intelligence (AI).

A spokesperson for Atlassian noted that more than 900 of the job cuts will impact roles associated with software research and development. This is noteworthy given that a majority of Atlassian’s employees are involved in software engineering and design—these roles account for over half of its total workforce of 13,813 as of June 2025.

In terms of specific geographic impact, approximately 640 affected employees are based in North America, 480 in Australia, and 250 in India. Remaining positions that are impacted by the layoffs are distributed across Japan, the Philippines, Europe, the Middle East, and Africa, according to information provided by the spokesperson.

Co-founder Mike Cannon-Brookes communicated to staff that this restructuring was “the right decision for Atlassian,” despite acknowledging the difficulties such changes entail. In a message shared late Wednesday (U.S. time), he expressed his empathy for employees affected by the layoffs, stating, “I know this has a huge impact on each of you, and it weighs heavily on me and Atlassian today.”

Since the beginning of 2026, Atlassian has seen more than half of its market value eroded as concerns rise among investors that AI advancements might render the company’s services obsolete. This decline in share price has severely affected the personal net worth of its co-founders, Cannon-Brookes and Scott Farquhar, significantly.

In his statement, Cannon-Brookes remarked that the skills and roles required by the company are evolving due to the integration of AI, which prompted the organization to undertake a restructuring aimed at strengthening its financial position and enabling it to self-fund future investments in AI and enterprise sales.

In addressing whether the layoffs were a result of AI replacing the employees, he clarified, “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.”

Cannon-Brookes also extended a gesture of support by having Atlassian’s internal Slack channels remain open for at least six hours longer than usual to allow employees the opportunity to say their goodbyes. “To Atlassians who are leaving us – I’m sorry for the impact this will have on you,” he expressed. “Thank you for everything you have contributed to our epic story.”

The union representing Atlassian employees, Professionals Australia, stated that the affected workers were informed on Thursday. A consultation process will continue until March 19, with final termination dates anticipated on April 2. Paul Inglis, a director with Professionals Australia, criticized the company, stating that many experienced professionals were notified of their redundancy with little to no prior warning or consultation.

According to Inglis, “These are experienced professionals who have helped build one of Australia’s most successful technology companies from the ground up. They deserve respect, transparency, and proper consultation when major decisions about their livelihoods and their future careers are made.” He added that many Australian Atlassian workers had joined the union to advocate for a say in how AI technologies are implemented within the workplace ahead of these “devastating” layoffs.

Professionals Australia has requested immediate discussions with Atlassian regarding the introduction and impact of AI technology, particularly as it relates to the layoffs; however, Atlassian has reportedly declined to comment on this matter.

Those employees affected by the layoff will be entitled to a severance package that includes a minimum of 16 weeks of pay, extended healthcare benefits, pro-rated bonuses, and a one-time payment of $1,000 for technology expenses upon returning their corporate laptops. Moreover, they will be offered optional one-on-one consultations with HR for additional support. Employees currently on scheduled parental leave will be compensated in full, and additional support will be available for those on work visas or seeking new opportunities within the company.

Those who are ultimately laid off will be paid for their last three weeks but will not be required to work during that period.

Atlassian has warned that costs related to the redundancies may total up to $174 million (A$246 million), and exit charges related to the downsizing of office space could involve at least $62 million (A$87 million). Most of these costs are expected to be recognized by the end of March and settled by the end of June.

Similar cuts in other tech companies attributed to AI

In the latest quarter, Atlassian recorded revenue of $1.6 billion (A$2.3 billion)—an increase of $300 million from the previous year, driven primarily by subscriptions to its array of workflow apps like Jira, Confluence, and Trello. However, the company remains unprofitable, having logged losses totaling millions since 2017, including a net loss of $42 million in the last quarter of 2025, an increase from a loss of $38 million the prior year.

Cannon-Brookes has indicated that the ongoing restructuring is aimed at accelerating Atlassian’s path toward profitability. Interestingly, following these announcements, investor confidence seemed to rebound, with the company’s share price increasing by 4% in extended trading on the Nasdaq.

As part of the ongoing reorganization, Atlassian has also announced that its current Chief Technology Officer, Rajeev Rajan, will be stepping down by the end of March. He will be succeeded by Taroon Mandhana and Vikram Rao, who are characterized as “next-generation AI talent.”

This round of layoffs is reminiscent of similar actions taken by other tech entities, such as Block, the parent company of Afterpay, and WiseTech, which both cited AI advancements as a primary factor for their workforce reductions. Block announced a staggering 40% cut to its global workforce, and WiseTech stated that it would eliminate 2,000 jobs over a two-year timeframe—amounting to around 30% of its workforce.

Both companies had experienced significant declines in their share prices over the preceding months, suggesting that while AI may play a role, there are multiple underlying factors influencing these workforce reductions.