Atlassian said it will cut roughly 10% of its workforce, about 1,600 employees, as the enterprise software company restructures operations to accelerate investment in artificial intelligence and expand its focus on large corporate customers.
The announcement comes as major software firms reshape their businesses as AI tools begin to transform the economics of software development and workplace collaboration.
Shares of Atlassian rose nearly 2% in extended trading after the company said the restructuring would allow it to “rebalance” resources and position itself for what it described as the “future of teamwork in the AI era.”
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In a memo to staff, chief executive Mike Cannon-Brookes said the layoffs reflect changes in how technology companies must organize talent as artificial intelligence becomes embedded across products and internal operations.
“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,” he wrote.
The company said the restructuring would generate $225 million to $236 million in charges, primarily related to severance payments and reductions in office space as Atlassian trims costs and shifts investment toward new technologies.
The job cuts will be concentrated largely in North America, where about 40% of the affected roles are located. Australia will account for roughly 30% of the reductions, while India will represent about 16% of impacted positions. Smaller layoffs are expected across Europe, the Middle East, Africa, Japan, and the Philippines.
The company said the restructuring program is expected to be substantially completed by the fourth quarter.
Atlassian also confirmed that its chief technology officer, Rajeev Rajan, will step down from the role effective March 31, signaling further organizational changes as the company reorients its technology strategy around AI-driven tools.
AI Reshaping The Enterprise Software Industry
The move comes as the software sector faces growing scrutiny from investors concerned that rapid advances in artificial intelligence could disrupt traditional software business models. Many AI systems are increasingly capable of automating coding, documentation, and project management tasks that previously required large teams of developers or support staff.
That shift is forcing software companies to rethink hiring strategies, internal workflows, and product roadmaps. Atlassian’s own stock performance illustrates the pressure facing the sector. Its shares fell about 33% last year, reflecting investor concerns about slowing growth across enterprise software companies as AI-driven tools begin to alter how organizations build and manage software.
Some analysts, however, say the market reaction may be exaggerated.
Gil Luria, an analyst at D.A. Davidson, said companies that integrate AI into product development and operations could ultimately improve margins.
“Software companies such as Atlassian have an opportunity to make their business more efficient by adopting AI tools, especially within their product development,” he said. “By reorganizing that way they can reduce the resources necessary to deliver their current business and grow more profitably.”
The restructuring also highlights Atlassian’s increasing emphasis on enterprise customers, an area that promises higher long-term revenue compared with smaller developer teams that historically formed the company’s core user base. Atlassian generates much of its income from collaboration and project-management software used by engineering teams.
Its flagship products include Jira, a widely used platform for tracking software development tasks and managing projects, and Confluence, a workplace knowledge-sharing and documentation platform.
Artificial intelligence is expected to become deeply integrated into those products. Features under development include AI-assisted coding workflows, automated documentation tools, and intelligent project planning systems capable of analyzing development pipelines.
Such capabilities could allow organizations to manage complex projects with smaller teams, one of the factors prompting companies like Atlassian to rethink staffing needs.
Part Of A Broader Tech Sector Shift
Atlassian’s restructuring mirrors a wider transformation unfolding across the technology industry.
Executives speaking at the annual meeting of the World Economic Forum earlier this year acknowledged that while artificial intelligence could eliminate certain roles, it would also create new jobs focused on AI engineering, data infrastructure, and advanced analytics.
However, some industry observers argue that AI is also providing companies with justification to accelerate layoffs that had already been planned as part of broader cost-cutting programs.
For Atlassian, the challenge will be proving that the restructuring strengthens its position in the rapidly evolving market for AI-powered workplace software.
The company is betting that tighter operations, deeper enterprise engagement, and faster development of AI-driven tools will help it compete in an increasingly crowded field where technology giants and specialized startups are racing to define the next generation of productivity software.