Freshworks product reorg brings HR software suite under Freshservice

By Vidhya Sivaramakrishnan
December 16, 2022, Updated on : Mon Dec 19 2022 02:16:52 GMT+0000
Freshworks product reorg brings HR software suite under Freshservice
It is unclear if Freshteam will continue to operate in its current avatar as a separate product, as a module within Freshservice, or be merged with the latter’s offerings completely.
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Freshworks is bringing one of its newer products, Freshteam, a HR software suite, under Freshservice, its fast-growing IT service management (ITSM) tool, Girish Mathrubootham, Co-founder and CEO of Freshworks, said in an email to employees sent on December 15 evening.


"We see a lot of opportunity by bringing our Freshteam group under our Freshservice business unit. Instead of having two separate groups building for the HR market, we can bring Freshteam's deep knowledge of HR buyers together with our Freshservice for Business Teams that also serves HR departments and other functions outside of IT," said Freshworks in a statement.


"We are not discontinuing the Freshteam product and we remain committed to supporting all of our current Freshteam customers. We cannot make other forward looking statements on our products at this point in time."


It is unclear if Freshteam will continue to operate in its current avatar as a separate product, as a module within Freshservice, or be merged with the latter’s offerings completely.


In the internal mail, Girish said the company is also looking to assign its hybrid sales teams to either generate new business (hunter) or drive account expansion (farmer). Freshworks is planning to optimise the “hunter/farmer mix across field and inside sales teams” to make their “go-to-market organisation more efficient and effective."

All about Freshservice

Freshservice, which has been the biggest contributor to the company’s annual recurring revenue (ARR) growth in recent quarters, helps mid-market customers automate and simplify internal IT operations. It was the second tool to be launched in January 2014 after the company's flagship product, Freshdesk.


In October this year, the company launched Freshservice for Business Teams to extend the scope of the product to support non-IT functions such as legal, HR and finance.


Freshworks is bringing Freshteam under Freshservice as it does not want two teams to build solutions for the HR market. The HR software product primarily provides applicant tracking and employee information solutions to small- and medium-sized businesses.

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"The expertise of our engineering, product, and design teams of Freshteam will be better utilised within Freshservice to help drive this growth. Freshteam folks bring a deep knowledge of the HR buyers which will be synergistic in driving the future development of our ESM (enterprise service management) solution (Freshservice for Business Teams)”, according to the internal mail Girish sent to the company’s employees on Thursday.


The exact revenues generated by Freshservice currently is unknown. In the mail to employees, the CEO said Freshservice is generating its “largest new deals”.


According to its Form-1 filing with the US Securities and Exchange Commission before it went public in 2021, the product was among the two that generated over $100 million in ARR as of December 31, 2020.


The company’s HR software product, which was launched in 2017, was not mentioned in the earnings calls for the last two quarters. In the first quarter of this year, responding to an analyst’s question on Freshteam, Girish said, “Freshteam, I would say it's still in incubation, it's too early to comment on our plans for Freshteam. So we would talk to you about it when it's more meaningful in terms of contribution.”


The San Mateo-based company is also looking to include account-based spending marketing and reduce its “overdependence on expensive paid campaigns” to make its marketing function more effective. In the works are plans to centralise its content and design teams.


Freshworks is letting go of 90 employees globally, of whom about 60 are based in India. These employees accounted for 1.7% of the company's 5,200-strong workforce.


Describing the move as a part of the “difficult business decisions” the company has taken, Girish said these were necessary for the continued success and growth in areas including “product focus on our biggest market opportunity”.


On December 15, the day the news about Freshworks' layoffs surfaced, the company’s share price fell 3.43% to close at $14.63 on Nasdaq.


(The story was updated to add a statement by Freshworks)

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