Software company ServiceNow has laid off 63 workers at its San Diego office and dozens more across California, reversing CEO Bill McDermott’s April pledge to maintain headcount into early 2027 and igniting a backlash among current and former employees of one of the region’s largest tech employers.

Broken Promise

McDermott had projected in April that ServiceNow would “absorb positions created by natural attrition through productivity gains from AI” rather than cut jobs directly, setting the company apart from competitors executing mass layoffs. The layoff notices sent Wednesday tell a different story. A Reddit thread titled “June Layoffs… it’s a bloodbath” — featuring an AI-generated image of McDermott with the words “You’re fired!” — has drawn more than 800 comments from stunned former employees, who speculate the total layoff count could reach 2,500 across ServiceNow’s global workforce of roughly 29,000, according to the San Diego Union-Tribune.

Roles Eliminated

A majority of the positions being permanently eliminated are senior roles focused on middle-market sales and consulting at the 4801 Eastgate Mall office. Roughly half of the cuts affect directors, senior managers, staff engineers, and senior consultants, alongside reductions in roles exposed to AI automation such as solution consulting, training, sales enablement, and customer support. The San Diego cuts are higher in number than those at the company’s Bay Area headquarters, according to a WARN notice published with the state. The layoffs take effect by August 17.

Investor Pressure

ServiceNow posted $3.77 billion in first-quarter revenue — a 22% year-over-year increase — and $469 million in profit. But investors remain unsatisfied with the pace of AI monetization. Analyst Keith Weiss of Morgan Stanley noted on an earnings call that other AI labs were adding $5 billion in net new revenue per quarter, while ServiceNow’s AI product Now Assist is projected to return just $1.5 billion by year’s end. When the company guided margins down from 82.1% to 81.5%, shares fell 14%. The stock closed Friday at $102.15, well off its 52-week high of $211.48. The layoffs underscore the growing tension in the tech sector between AI investment promises and workforce realities, as even financially healthy companies face pressure to demonstrate returns on their artificial intelligence strategies. The San Diego office, located in the University City tech corridor, has been a significant employer in the region for several years.

ServiceNow did not respond to a request for comment on the layoffs. The company’s San Diego office at 4801 Eastgate Mall has been a significant employer in the University City tech corridor for several years.