Monday.com Reverses Course, Lays Off 20% of Staff Despite Earlier AI Hiring Optimism

Just seven weeks ago, Monday.com executives expressed strong optimism about artificial intelligence's impact on the labor market, asserting AI would create more jobs and revenue rather than replace employees. The company’s leadership, including CEO Eran Zinman, emphasized that AI would expand the need for software engineers and that the firm planned to continue hiring aggressively, dismissing industry-wide layoffs as short-term trends to avoid.

However, Monday.com has now announced layoffs of approximately 620 employees, about 20% of its global workforce, with half of those cuts occurring in Israel. The company insists this is not a cost-cutting or AI-driven efficiency move but an "organizational adjustment" to prepare for a new era where AI changes software development, sales, and implementation. This shift starkly contrasts with the upbeat messages conveyed just weeks earlier.

Financially, Monday.com reported record quarterly results in May, beating analyst expectations, raising its annual forecast, and holding over $1.2 billion in cash and investments. The company also repurchased shares worth more than $500 million. Despite this strong performance, the firm slowed hiring growth from 30% to around 15% annually but previously rejected broad layoffs as harmful to competitiveness and product development.

The layoffs coincide with a reversal of earlier expansion plans. In early 2025, Monday.com announced leasing 11,000 square meters across ten floors in Tel Aviv’s Eco Tower to support workforce growth. By May, the company scaled back to just three floors in a nearby building, citing a reassessment of real estate needs. This contraction occurred despite announcing 400 new positions for 2025 but only adding 235 employees in Israel so far.

Monday.com’s leadership maintains the layoffs are strategic adjustments rather than efficiency measures, yet the rapid change from hiring optimism to significant cuts raises questions about the company’s evolving approach to AI and workforce management in a fast-changing software industry.