HubSpot layoffs: CEO says job cuts are not driven by AI ‘efficiencies,’ but AI is still behind the sweeping changes

HubSpot has announced the layoff of 7% of its workforce, amounting to around 660 employees. The company is restructuring itself around its AI-driven customer outcomes strategy. This move comes amid investor concerns about AI potentially reducing the need for software like HubSpot's, known as the "SaaSpocalypse." HubSpot's platform aids businesses in managing customers, sales, and marketing.

The company's stock price has declined by over 43% this year, leading to its removal from the FTSE All-World Index (USD). After the announcement of layoffs, HubSpot's shares initially rose before falling again. CEO Yamini Rangan stated in a memo that the layoffs are not driven by AI-related efficiencies but aim to align the organization's structure with its strategy. She added that the company is building a "flatter organization with fewer layers" by reducing management layers.

Rangan also acknowledged that AI has been a central focus for the company. In August, she attributed their slow start in April to AI. Despite the layoffs, laid-off employees will receive 20 weeks of base pay, one week per year of service (up to 30 weeks), five months of COBRA and Modern Health healthcare benefits, and will be able to keep their laptops.

Tech industry layoffs have been increasing this year, with other software companies following suit. In March, Atlassian laid off 10% of its staff to invest in AI. Oracle made significant cuts in March, June, and September, while Salesforce reduced customer service jobs earlier this year. Workday, another company, cut support roles in February and September. Some executives, including OpenAI's Sam Altman, have criticized companies for "AI washing," or misleadingly attributing layoffs to AI advancements.