Australian company Atlassian cuts 500 jobs as ‘tech wreck’ worsens

A well-known tech player that is valued at $66 billion and was recently recruiting for more than 1000 roles has abruptly announced job cuts.

Australian tech giant Atlassian has announced its slashing 500 roles from its operations. Picture: Supplied

Australian technology giant Atlassian is the latest casualty of the “tech wreck" sweeping the sector as it announced it was slashing 500 jobs from its global operations.

It will see 5 per cent of the company’s workforce impacted and comes just months after its co-founder Scott Farquhar launched a hiring blitz to find 1032 new people for roles at Atlassian – mostly in the research and development teams.

Mr Farquhar drove a branded bus called the “AtlassiVan” around major city centres to attract new talent – yet on Tuesday employees began to receive emails within 15 minutes of the redundancies being announced.

The most impacted divisions include roles in the the talent acquisition, program management, and research and insights teams, according to the company.

Atlassian co-founder Scott Farquhar during a recruitment drive by software company Atlassian in Rundle Mall Adelaide. Picture: NCA NewsWire / David Mariuz

The recruitment drive was launched in October. Picture: NCA NewsWire / David Mariuz

In an internal note to staff – which was also released on Atlassian’s website – co-founders Mike Cannon-Brookes and Mr Farquhar revealed it was a “very hard day in our 20 year history” and they were “deeply sorry” to have to make the job cuts.

“In the spirit of open company, no bulls**t, here’s our honest take on how these decisions came to be,” the founders wrote.

“A month back we reorganised our company to better reflect operating in a changing and difficult macroeconomic environment. We made tough calls to prioritise the most critical work for our current and future customers. While it helped us streamline work, we need to go further in rebalancing the skills we require to run faster at our company priorities.

“To be clear, this decision is not a reflection of Atlassian’s own financial performance, as we will be reinvesting in roles that better support our priorities.”

Atlassian co-founders Scott Farquhar and Mike Cannon-Brookes. Picture: Supplied

The cuts will cost company – which is valued at $A66 billion – between $US70 million to $US75 million ($A104 million to $A111 million) in one-off expenses.

The company’s workforce had more than tripled in the last four years to 10,787 employees at the end of 2022, according to US Securities and Exchange Commission documents.

Its also a sharp turnaround for the software company that had been a vocal critic of the need to create more skilled tech workers in Australia.

The job cuts post also emphasised the “hard calls” were made to reduce investment in specific areas but the redundancies weren’t a broader cost cutting measure.

“This is different to a financially-driven reduction, where you would look to make ‘broadbased cuts’ – for example, a 10 per cent cut equally distributed across every org within the company. This is not what is happening here,” they said.

Construction is underway on global software giant Atlassian’s 39-storey headquarters. Picture: Atlassian Central Media

Redundant staff will be offered 15 weeks of pay plus one week for each year of service, while the sign-on bonus provisions will be waived, and any accrued and unused paid time off will be paid out and affected employees will be given six months of healthcare benefits.

Former workers will also be able to keep their laptops once they have been remotely wiped and it will accelerate vesting of its share scheme which is set to take place in May.

Meanwhile those who have worked for the giant for less than a year will receive vesting for the number of quarters they have worked at Atlassian.

The founders also acknowledged the “industry standard is to block access to communication tools immediately” but it did not want to take this path as trust was an important part of the company culture.

Instead most people would have the opportunity to interact with their teams until Friday, while staff with “access to sensitive data” will have their laptops locked, but will still be able to use Confluence, Slack, Zoom, and Gmail on other enrolled devices, they said.

Atlassian co-CEOs Mike Cannon-Brookes and Scott Farquhar. Picture: Atlassian

In a US regulatory filing, Atlassian said the cuts would allow the company to focus on its biggest growth opportunities, operate more efficiently and invest in strategically important areas.

The founders added the company had “massive growth opportunities” particularly across cloud migrations, IT service management and serving enterprise customers in the cloud.

Atlassian delivered soft revenue guidance for the March quarter with revenue of $US890 million to $910 million forecast as opposed to expectations of $US900 million.

Some of the world’s biggest tech companies have slashed thousands of roles in recent months.

Facebook’s parent company founded by Mark Zuckerberg announced the first lay-offs in its 18-year history in November – cutting 13 per cent of its workforce – about 11,000 jobs, while Google’s parent company Alphabet also enacted large-scale restructuring with 12,000 jobs cut globally.

Amazon chief executive Andy Jassy also told employees the company would act on the findings of a recent review and cut more than 18,000 jobs – around 6 per cent of the online retail giant’s global corporate workforce and PayPal slashed its global headcount by 2000 employees.

Robin Lee, Maddie Chapman, client partner, and John Keightley from the Atlassian recruitment RV at Pacific Fair in October. Picture: Jerad Williams

Microsoft said it would lay off 10,000 employees in the coming months as the economic downturn continues to punish US tech giants.

Global software giant Salesforce announced in January it would cut about 8000 employees, in the biggest round of lay-offs in its 24-year history, after already letting go of about 1000 people in a round of redundancies in November.

Closer to home, Australian start-ups and tech companies have also had to shed their staff to survive turbulent market conditions.

Fintech Finder cut 15 per cent of its workforce with contractors, freelancers and permanent full-time workers all “impacted” earlier this year, while one of the big four accounting firms KPMG Australia had pinned 200 roles for redundancy after a drop in demand from clients due to worsening economic condition.

A software firm called Thoughtworks, with offices in Sydney, Melbourne and Brisbane, laid off 100 employees and another software development company, Kinde, laid off 28.5 per cent of staff at the end of last month.

News.com.au also revealed that tech service provider Diverse Services (WA) also let go of its entire workforce when the company collapsed into liquidation.