SaaS major Freshworks lays off 90 employees globally; 60 in India

Nasdaq-listed Software-as-a-Service (SaaS) major Freshworks has said that it has laid off around 2 per cent or 90 of its total workforce, to fuel business growth. Out of this, around 60 affected employees are from India. This comes at a time when multiple legal firms have filed or are in the process of filing class action suits against the company, alleging that it made misleading statements.

"To fuel our business growth, we made organisational changes to create better alignment across the company. We shifted some existing roles in product, marketing and sales to support more critical initiatives and reduced the need for a small number of others – less than 2 per cent of our workforce. Freshworks did not do a company-wide layoff," the company said in a statement on Thursday night. The company has a total staff strength of 5,200 people.

The company’s founder chief executive, Girish Mathrubootham too termed it as a structural change, rather than a company-wide layoff. In a letter to its employees, Mathrubootham reportedly said that it has retained the majority of its employees and only around 90 employees were laid off. According to the media reports, the company said the impacted employees are supported by Freshworks during the transition phase.

Following the slowdown in the US market, Indian SaaS players came out with various cost-cutting measures, including job cuts in recent times. Several other companies in the sector including Chargebee, Salesforce and Zendesk too had announced layoffs recently.

This comes at a time when the poster boy of India’s SaaS ecosystem is facing a class action lawsuit filed by Schall Law Firm and Scott + Scott Attorneys at Law. Both the US-based law firms have alleged that the company made false and misleading statements to the market.

Now, reports are coming about other companies like Levi & Korsinsky notifying the investors of a class action securities lawsuit with a deadline as January 3 to request the Court appointment of lead plaintiff.   In addition, law firm Kirby McInerney LLP also announced that a class action lawsuit has been filed in the U.S. District Court for the Northern District of California on behalf of those who acquired Freshworks. Investors have until January 23, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit. According to reports, the lawsuit seeks to recover losses on behalf of Freshworks investors who were affected by alleged securities fraud.

The company got listed on Nasdaq last year through an IPO, offering 28.5 million shares in common stock to the investing public at a price of $36 a share. On listing day, Freshwork’s stock closed at $47.55 apiece. Since then the stock price has fallen by as much as 70 per cent to $14.63 as of now.