Atlassian to cut 1,600 employees and change CTO to accelerate AI strategy

Atlassian announced a major restructuring in recent years: the company will cut about 1,600 employees, roughly 10% of its workforce, and simultaneously change its technological leadership. Formally, this is not simply cost-cutting but resource reallocation in favor of AI and enterprise sales.

Scale of Layoffs

Employees across multiple regions will be affected by the layoffs. The company clarified that approximately 640 affected roles are in North America, 480 in Australia, 250 in India, with the remainder distributed between Europe, Japan, the Philippines, the Middle East, and Africa. The most significant blow hit product and engineering teams: more than 900 positions are tied to development and research.

This is a particularly notable step for Atlassian because the majority of its workforce has traditionally been concentrated in development and product design. As of June 2025, the company had 13,813 full-time employees, with over half working in technical roles. The union Professionals Australia called what's happening a heavy blow and stated that employees did not receive proper consultation before the restructuring announcement.

Why the Turnaround

In a letter to employees, co-founder and CEO Mike Cannon-Brookes directly stated that the company wants to self-finance further investments in AI and corporate sales, while simultaneously strengthening the business's financial profile. In the same restructuring, Atlassian is eliminating a separate CTO role: Rajiv Rajan will leave at the end of March, and his functions will be split between Tarun Mandhana and Vikram Rao — managers whom the company calls the new generation of AI leaders.

"Our approach is not that AI replaces people."

But immediately after this phrase, Atlassian adds a harsher thought: artificial intelligence is changing the set of required skills and reducing the need for certain roles. This aligns well with current business figures. In February, the company reported quarterly revenue of $1.586 billion, cloud revenue growth of 26% year-over-year, and more than 5 million monthly active users of Rovo. Meanwhile, on a GAAP basis, Atlassian is still unprofitable: net loss for the quarter was $42.6 million. Following the news, shares rose approximately 4% in extended trading, although since the beginning of 2026 the company has lost more than half its market value.

What Employees Will Receive

The company promises a support package exceeding minimum requirements in different countries. According to the official statement, Atlassian allocates between $225 million and $236 million for layoffs and associated expenses, including payments, transition compensation, and office space reduction.

• minimum 16 weeks of severance pay plus one additional week per year of service
• early payment of the proportional portion of 2026 fiscal year bonuses
• $1,000 toward equipment after returning corporate laptop
• extension of health coverage for six months for eligible employees and their families
• separate assistance for people with visas, job search within the company, and external job placement

Additionally, the company promised to keep Slack open for several hours so laid-off employees could say goodbye to their teams, and for certain markets, to conduct mandatory consultations under local labor law. In practice, this means that some decisions have already been made, while others will still go through formal procedures before final dismissal.

What This Means

Atlassian shows how the logic of a large SaaS business is changing in 2026: even with revenue growth, the company is willing to cut engineering teams first if it believes the next stage of competition will revolve around AI features, enterprise sales, and product launch speed. For the market, this is yet another signal that the phrase "AI doesn't replace people" increasingly coexists with quite real layoffs.