Cybersecurity company Cloudflare (headquartered in San Francisco) has just attracted attention when announcing cuts of about 1,100 jobs, equivalent to nearly 20% of the global workforce, even though revenue in Q1/2026 reached a record 639.8 million USD.
According to Cloudflare's leadership, the main reason does not come from financial difficulties but from the increasing impact of artificial intelligence (AI) on labor productivity.
The company believes that many traditional positions have become unnecessary as AI can support or replace part of human work.
CEO and co-founder of Cloudflare - Matthew Prince, said the company is entering a strong transition to an AI-based operating model.
He emphasized that the application of internal AI tools in recent months has created a leap in work efficiency in many departments such as engineering, human resources, finance and marketing.
According to Cloudflare, the level of AI use within the company has increased by more than 600% in just three months. Mr. Prince assessed that some employees achieve "two, ten, even 100 times higher productivity" thanks to AI support. He likened this change to the transition from manual screwdrivers to electric screwdrivers in the mechanical industry.
The field most clearly affected is software development. Cloudflare said that almost the entire research and development department now uses AI-integrated programming tools.
Not only supporting writing code, the code segments created by AI are also automatically checked by other AI agents before being put into the official product.
This change makes the company assess that they will need less personnel support around high-performance technical teams thanks to AI.
According to Cloudflare leaders, many traditional support functions may no longer play the role they used to in modern technology companies.
This is also the first large-scale personnel cut in Cloudflare's 16-year history. Cloudflare's Chief Financial Officer Thomas Seifert believes that personnel streamlining will affect most departments, except for the sales team that directly generates revenue.
Before the layoff took place, Cloudflare had about 5,500 employees globally. However, the company affirmed that the cuts did not mean a freeze on recruitment.
CEO Matthew Prince affirmed that Cloudflare will continue to look for personnel capable of working effectively with AI and believes that the company's total workforce may increase again by 2027.
Cloudflare's move reflects a trend that is spreading in the global technology industry. Many large corporations such as Meta, Microsoft or Amazon are also stepping up investment in AI, while cutting back on a part of the traditional labor force.
In the context of AI increasingly being deeply integrated into business operations, experts believe that the technology labor market is entering a major restructuring phase.
Repetitive or basic support positions are at risk of shrinking, while the demand for personnel who know how to leverage AI to increase productivity will increase sharply.
