Workday CEO Carl Eschenbach Dismisses AI Concerns for Software Business Models
Workday CEO Carl Eschenbach has firmly dismissed widespread concerns that artificial intelligence (AI) will negatively impact software business models. In a recent interview, he labeled such fears as overblown and untrue, even as his own company underwent significant restructuring involving job cuts.
AI-Focused Restructuring and Layoffs at Workday
Despite Eschenbach's optimistic stance, Workday eliminated approximately 1,750 jobs, representing 8.5% of its workforce, in February 2025. This move was part of a strategic restructuring aimed at supporting the company's growth initiatives, with a particular focus on AI investments. In a memo to employees, Eschenbach emphasized that these layoffs were necessary to bolster the company's position in the competitive AI landscape.
Market Pressures and Software Stock Declines
The software sector has faced considerable pressure in recent months, with stocks declining amid fears that new AI tools could disrupt traditional business models. According to a CNBC report, Workday shares experienced a 17% drop last year and have fallen an additional 15% since the start of 2026. This decline followed a third-quarter earnings report that included weak subscription revenue guidance.
Other major software companies have encountered similar challenges:
- Adobe and Salesforce saw their shares lose 21% last year.
- HubSpot experienced a decline of over 40%.
Eschenbach's Vision: AI as a Tailwind, Not a Headwind
Speaking from the World Economic Forum in Davos, Switzerland, during an interview with CNBC's "Squawk Box," Eschenbach articulated a contrasting perspective. He stated, "It's an overblown narrative, and it's not true," adding that AI serves as a tailwind and is "absolutely not a headwind" for Workday.
Eschenbach highlighted that businesses are increasingly turning to Workday for AI tools and access to its first-party data. This reliance, he argued, strengthens the company's position against third-party tools and enhances its competitive edge.
Strategic Moves and Growing AI Demand
To further solidify its AI capabilities, Workday recently signed a three-year deal with OpenAI. This partnership aims to enhance the company's offerings and address the growing competitive pressure in the AI space. Eschenbach noted that many software companies are investing in additional tools to expand their AI stacks and meet rising demand.
He expressed confidence in Workday's unique position, stating, "We are uniquely positioned to be one of the AI winners in the enterprise because of our incumbency, and lastly, because of the trust we get from our customers."
Conclusion: Balancing Optimism with Market Realities
While Eschenbach remains bullish on AI's potential to drive growth, the software industry continues to navigate a complex landscape marked by job cuts, stock volatility, and evolving competitive dynamics. As companies like Workday invest heavily in AI, the sector's future will likely hinge on their ability to adapt and innovate in response to these challenges.
