Atlassian cuts 1,600 jobs due to AI changes

In Short:
– Atlassian will cut 1,600 jobs, 10% of its workforce, mainly in Australia.
– Employees will receive significant severance packages and support services.

Mike Cannon-Brookes has announced a significant reduction of Atlassian’s workforce by 1,600 employees, representing 10 per cent of the company, as it adapts to the growing impact of artificial intelligence.

The job cuts will affect local operations heavily, with about 30 per cent of the layoffs occurring in Australia.

Job cuts confirmed

Atlassian’s shares have dropped over 66 per cent in the past year, resulting in a $19 billion loss in value amidst concerns that AI tools may substitute its core products.

Cannon-Brookes stated that the redundancy decision was challenging and conveyed via email shortly after the public announcement.

The layoffs are anticipated to cost between $US225-$236 million ($316-$331 million) in severance and related expenses.

Cannon-Brookes emphasized the necessity to reshape skill sets and operational dynamics for future growth.

Atlassian’s employee terminations will incur costs of about $US169-$174 million, with an associated $US56-$62 million for reducing office space.

Plans for Atlassian’s new headquarters in Sydney, scheduled for completion in 2028, remain unaffected.

The company recorded total revenue of $US1.59 billion for the most recent quarter, a 23 per cent increase from the previous year.

AI adaptation strategy

Despite revenue growth, investor concerns persist regarding the sustainability and sources of this increase.

Cannon-Brookes acknowledged that software companies now face higher expectations for growth, profitability, and value creation due to AI advancements.

AI’s potential for job automation has raised broader labour market anxieties, according to analysts.

Cannon-Brookes revealed that Atlassian is leveraging AI tools to maintain competitiveness and highlighted the essential role of data in maximizing AI effectiveness.

The company aims to support affected employees with an extensive separation package.

For those impacted, Atlassian will provide a minimum 16-week severance, bonuses, technology stipends, and career support services.