Atlassian cuts 10% of workforce to prioritize AI investment

Australian productivity software company Atlassian announced on March 11 that it is cutting 10% of its workforce, a reduction that impacts around 1,600 people. The company stated that this decision will allow it to spend more funds on artificial intelligence and enterprise sales—defined as sales strategies targeting large organizations—while also strengthening its finances. Atlassian emphasized that it is currently doing well but is choosing to adapt to changing market conditions. The announcement marks a shift for the company as it seeks to strengthen its finances while increasing its spending on artificial intelligence. When TechCrunch reached out to Atlassian for additional information regarding which specific roles were affected by the cuts and what happens next, the company declined to comment beyond its initial release.

The decision reflects a broader pressure on software firms to deliver higher efficiency. In a press release related to the layoffs, Atlassian CEO Mike Cannon-Brookes framed the cuts as a response to escalating industry standards. “The bar for what ‘great’ looks like for software companies — on growth, on profitability, on speed, on value creation — has gone up,” Cannon-Brookes wrote.

This development follows a similar pattern established by payments company Block. In February, Block announced it was cutting more than 4,000 employees, out of its total of 10,000 employees at the time. Block CEO Jack Dorsey cited automation as a primary driver for the workforce reductions, stating that AI could automate a lot of the work these employees were doing. Dorsey also predicted that many other companies would come to the same conclusion. These consecutive corporate restructurings align with earlier forecasts from several enterprise-focused venture capitalists. These VCs predicted to TechCrunch that 2026 would be the year that AI would start to take a meaningful toll on labor—a prediction that has so far come true.

Why it matters

Atlassian’s move highlights a broader shift in the software sector where companies are sacrificing headcount to fund AI development. This reflects a growing industry consensus that AI automation is beginning to impact labor.