Why Enterprise Software Just Became an AI Arms Race—And What You Need to Know

“The biggest takeaway for me is that the government is realizing that AI is potentially a big productivity enhancer. Contrary to the negative press around AI, it can actually make people better at their jobs.” - Dennis Woodside, CEO and President of Freshworks

What this is about:

Yesterday, Freshworks CEO Dennis Woodside told Reuters something that should be on every business owner's radar: his company has $813 million in cash and is aggressively hunting for acquisitions—with artificial intelligence at the top of the list.​

This isn't just corporate news. It's a signal that the enterprise software landscape is shifting. The companies that power your customer service, CRM, and business operations are now in an arms race to embed smarter AI capabilities. And that means the tools you use—or should be using—are about to change fundamentally.

Here's what's really happening, why it matters, and what you need to do about it.

The Consolidation Wave: AI Is Driving M&A

Freshworks's acquisition strategy isn't happening in a vacuum. CEO Woodside revealed that he's spoken with roughly 50 potential acquisition targets over the past six months, evaluating companies in AI and employee experience software across Israel, Europe, the United States, and India.​

This reflects a broader pattern. According to J.P. Morgan, global M&A volumes surged 39 percent to $4.3 trillion in 2025—driven substantially by artificial intelligence adoption across the tech sector. Companies aren't just buying for legacy revenue streams anymore. They're buying to add AI capabilities.​

Freshworks's playbook is instructive: The company already acquired Device42 (IT management software) for $230 million last year and just announced the acquisition of FireHydrant (incident management platform). Each acquisition brings specialized capabilities that integrate into Freshworks's customer service and IT support platforms. The pattern is clear: consolidate specialized AI and automation capabilities into broad, integrated platforms.​

This is strategic. Freshworks competes directly with Salesforce and ServiceNow—giants that have their own M&A war chests and development budgets. By acquiring specialized AI companies, Freshworks can move faster, offer more integrated workflows, and avoid the "built vs. bought" decision trap that slows down internal R&D.

Why This Moment, Right Now?

The timing matters. Freshworks is making this move while AI-native startups are actively disrupting traditional SaaS vendors with more personalized, specialized tools. The old model—buy a monolithic CRM or customer service platform and bolt features on top—is collapsing.​

Instead, we're entering an era of agentic AI: autonomous systems that don't just assist humans but actively manage workflows, make decisions, and optimize processes. According to Cisco, by 2028, an estimated 68 percent of customer service and support interactions will be handled by agentic AI systems.​

Freshworks's acquisition spree is a bet that businesses will demand this level of automation. They're positioning themselves to own the full stack: incident management, customer support, IT operations, and employee experience—all powered by AI agents that work across systems.

What Freshworks Is Really Buying

Woodside was explicit about the company's strategy. All of Freshworks's engineering teams are already in India (80 percent of its 4,500-person workforce). The company is looking to acquire companies it can easily integrate into that engineering operation—especially in India, where acquisition targets align with existing talent and infrastructure.​

This tells you something important: Freshworks isn't just buying revenue. It's buying engineering talent and proprietary AI models. Every acquisition is an opportunity to absorb specialized knowledge and accelerate product roadmaps.

The company forecasts double-digit percentage revenue growth for the next three years. That growth projection isn't coming from organic development. It's coming from the aggressive integration of acquired AI capabilities into existing platforms that thousands of businesses already use.

What This Means for Your Business

Consolidation = Integration

If you use Freshdesk, Freshservice, or other Freshworks products, you're about to see more features appear automatically. The company's acquisition strategy means that capabilities from incident management, employee experience, and specialized AI will start flowing into core platforms.

For most business owners, this is good news. Your current tools will get smarter without requiring new software.

But it also means you need to pay attention to how these integrations work. You might suddenly have powerful AI agents handling customer support that you didn't know were coming. That requires understanding what your existing software can now do—and how to tune it for your specific workflows.

The Cost of Entry Is Rising

Here's the harder reality: As enterprise software becomes a consolidation play, the gap between legacy systems and AI-powered systems will widen. Smaller vendors will be acquired or squeezed out. Prices—or at least the value bar—will rise.

OpenAI just raised the price of its GPT-5.2 API by 40 percent while launching it as the company's most advanced reasoning model. Freshworks's acquisition spree signals that broader business software is heading the same direction: higher costs, but significantly more capability.​

For business owners still on older systems or not yet adopting AI-powered workflows, this is the moment to evaluate. Waiting 18 months could mean paying more or using less competitive platforms.

The Competitive Pressure Is Real

There's also a shadow player in this story: Apple is not keeping pace. While Freshworks and OpenAI are racing to embed more AI everywhere, Apple announced yesterday that its enhanced Siri AI features won't ship until 2026—a significant delay from the company's original promises.​

This matters because Apple's ecosystem (iPhone, iPad, Mac) is where many small business owners and their teams work. The delay signals that Apple is struggling to deliver consumer AI at the pace competitors are moving. For businesses that rely on Apple's productivity tools, this is worth noting: You may need to supplement with third-party AI solutions sooner than expected.

The Broader Pattern: AI Becomes Mandatory

The Freshworks acquisition spree is one data point in a larger shift. Agentic AI—systems that can plan, decide, and act autonomously—is moving from "nice to have" to "table stakes" across enterprise software.​

By 2028, Gartner predicts that 15 percent of day-to-day work decisions will be performed by AI agents. A third of all enterprise software applications are expected to include agentic AI. Right now, many organizations are stuck in pilot mode—30 percent are exploring agentic AI, but only 11 percent are actively using it in production.​

That gap will close quickly. The companies spending $800 million on acquisitions (like Freshworks) are betting on that transition. They're positioning themselves to serve the 89 percent of enterprises that haven't moved yet.

What you should do right now.

For social media managers and marketing teams:

1. Audit Your Current Tools: If you use Freshworks, Salesforce, ServiceNow, or similar platforms, schedule a conversation with your vendors about AI roadmaps. Understand what's coming. Many features are already available but aren't well-documented or trained on internally.

2. Evaluate AI-Native Alternatives: The acquisition wave means specialized tools are disappearing into broader platforms. If you need specialized capabilities (incident management, email automation, advanced analytics), now is the time to evaluate before they're absorbed into larger suites.

3. Build an AI Literacy Plan: Your team doesn't need to become AI experts, but they do need to understand how AI will change their workflows. Whether it's AI agents handling customer support or generative AI handling content creation, the change is coming fast. Training now reduces disruption later.

4. Budget for Upgrade Costs: If you're using older systems, expect that upgrade windows are narrowing. Vendors are consolidating, pricing is rising, and the AI-powered alternatives will become the default. Plan for that transition sooner rather than later.

5. Watch the M&A Space: Not every acquisition works. But understanding who's buying whom in the AI space tells you where innovation is happening. Freshworks's focus on incident management, employee experience, and AI suggests those are the growth areas where business owners will see the most change.

The Bottom Line:

Freshworks's $800 million acquisition strategy isn't about one company's growth. It's a signal that artificial intelligence is consolidating into enterprise software, and the companies that own the platform will have significant advantages.

For business owners, that means:

• Your current tools will get smarter (often automatically).

• The cost of staying competitive is rising (in dollars and in learning curve).

• The window to adopt these tools is narrowing (as consolidation reduces choice).

• The pressure to move from "trying AI" to "AI-first operations" is accelerating.

The good news: The infrastructure is there. Platforms like Freshworks are making it simpler, not harder, to embed AI into everyday business operations. The challenge is understanding what's available and building the habits to actually use it.

The companies that move fast on this will have a significant edge over those that wait. Freshworks is betting that's true. So are OpenAI, Google, and every other major tech company spending billions on AI. The question isn't whether AI will transform your business—it will. The question is whether you'll lead that transformation or react to it after it's already underway.

Sources & References

• Reuters / MarketScreener – "US software firm Freshworks eyes acquisitions with $800 million cash pile, AI in focus" (December 17, 2025). https://www.reuters.com/technology/us-software-firm-freshworks-eyes-acquisitions-with-800-million-cash-pile-ai-2025-12-17/​

• Intouch CX – "The Rise of AI Agents: Redefining Automation and Productivity in 2025" (December 9, 2025). https://www.intouchcx.com/thought-leadership/the-rise-of-ai-agents-redefining-automation-and-productivity-in-2025-2/​

• Ars Technica – "OpenAI releases GPT-5.2 after 'code red' Google threat alert" (December 11, 2025). https://arstechnica.com/information-technology/2025/12/openai-releases-gpt-5-2-after-code-red-google-threat-alert/​

• CNBC – "Apple punted on AI this year. Next year will be critical" (December 17, 2025). https://www.cnbc.com/2025/12/17/apple-ai-delay-siri.html​

• Microsoft – "The era of agentic business applications arrives at Convergence 2025" (December 8, 2025). https://www.microsoft.com/en-us/dynamics-365/blog/business-leader/2025/12/09/the-era-of-agentic-business-applications-arrives-at-convergence-2025/​

• Fortune – "2025 was the year of agentic AI. How did we do?" (December 15, 2025). https://fortune.com/2025/12/15/agentic-artificial-intelligence-automation-capital-one/