Atlassian Axes 10% of Workforce to Fuel AI Ambitions Amid Tech Slump

Atlassian, the Sydney-based maker of popular tools like Jira, Trello, and Confluence, announced on March 11 that it will cut approximately 1,600 roles, representing 10% of its workforce. CEO and co-founder Mike Cannon-Brookes detailed the decision in a blog post and video message, stating the layoffs will self-fund investments in AI and enterprise sales while streamlining operations for faster execution. The move affects employees across 14 countries, with about 30% of cuts in Australia, and includes the departure of CTO Rajeev Rajan effective March 31.

Cannon-Brookes emphasized that while AI won't replace people outright, it undeniably shifts the skills mix and role requirements needed for an 'AI-first company.' The company prioritizes retaining strong performers, recent graduates, and those with transferable skills. Impacted employees receive generous severance: at least 16 weeks' pay plus one week per year of service, prorated bonuses, extended healthcare, and a $1,000 tech stipend. Access to internal systems ends swiftly, within 12-20 hours of notification.

This follows a pattern in tech, mirroring Block's recent layoffs tied to AI advancements, amid a broader software slump pressuring growth and profitability. Atlassian, riding pandemic-fueled demand, reported strong Q2 results with $1.6 billion in revenue (up 23% year-over-year) and momentum in cloud products and its Rovo AI suite. Yet shares have dropped 64% in the past year, prompting reorganization after 2023 cuts of 5% of staff.

The restructuring, costing $225-236 million mainly in severance and office reductions, underscores industry tensions between AI innovation and job preservation. Atlassian recently acquired productivity startups DX and The Browser Company to bolster AI integrations. Investors reacted positively, with shares up over 1% in after-hours trading, signaling confidence in the pivot despite workforce disruption.