Atlassian (NASDAQ:TEAM) will cut around 1,600 jobs — roughly 10% of its global workforce — in a sweeping restructuring that highlights a growing tension across the technology industry: the race to build AI-powered products is increasingly colliding with concerns about what the technology means for human jobs.
The Australian-founded collaboration software company outlined the layoffs in a company update from co-founder and co-CEO Mike Cannon-Brookes, saying the move will help accelerate its push into artificial intelligence and enterprise growth.
But the scale of the cuts underscores how quickly the economics of software development are shifting as AI tools begin to automate tasks once performed by large teams of engineers, support staff and operations specialists.
According to reports, about 30% of the impacted roles — roughly 480 employees — are based in Australia, adding a significant local dimension to the layoffs for a company long seen as one of the country’s biggest global tech success stories.
AI’s productivity promise — and workforce reality
Atlassian said the restructuring is designed to help it move faster in building what it calls the “System of Work”, its integrated platform of tools including Jira, Confluence and Trello that help companies manage projects and software development.
The company has been rapidly embedding AI features across those products, from tools that summarise documentation and automate workflows to assistants that help developers write and review code.
In its update to staff, Atlassian argued the changes would allow it to redirect resources towards those capabilities while simplifying internal structures.
Yet the layoffs also reflect a broader reality facing the tech industry: AI promises enormous productivity gains — but those gains may require fewer people.
Across Silicon Valley and the global tech sector, companies have been reshaping workforces while increasing spending on AI infrastructure and development.
Some of the cuts have been framed as the final stage of post-pandemic cost discipline after aggressive hiring in 2020 and 2021. Increasingly, though, executives are openly linking workforce changes to the impact of AI on how software is built and maintained.
Part of a wider tech shift
For collaboration software companies like Atlassian, the stakes are particularly high.
Their tools sit at the centre of how many organisations manage work, software development and internal communication — meaning AI features that automate tasks or streamline workflows could fundamentally reshape how those products are used.
Atlassian has been pushing hard into that space as competitors race to embed AI across workplace software.
Restructuring costs and timeline
Atlassian said the restructuring will result in US$225 million to US$236 million in charges, largely tied to severance payments, employee benefits and office space reductions as the company reshapes its workforce.
Most of those costs are expected to be recognised in the third quarter of fiscal 2026, with the restructuring process largely completed by the end of the fiscal year.
In his message to staff, Cannon-Brookes acknowledged the impact of the cuts, describing them as a difficult decision but arguing the company needs to move faster as the next phase of software development is increasingly shaped by AI.
For Atlassian — whose products are deeply embedded in software development teams around the world — the shift reflects how quickly the competitive landscape is evolving as AI becomes a core feature of workplace software.
Shares in Atlassian were down US$2.56, or 3.28%, to US$75.45 on the day following the announcement.
