Unfortunately this is just the start of it all. I don't think people really understand the implications of AI. It will be massive, I believe that the only thing that should be up for debate is how long it will take. I think it will be faster than most people think. As for those that think it won't have much of an impact, well, those people are going to be in for a massive surprise.

The company that actively chooses to work with AI and work out how to make it work for them, change their processes etc, those companies are likely to survive, unfortunately the work force within them won't be anywhere near as large.

Time will tell.

@Foxlowe I absolutely agree - there are many questions I have, but this is not one of them.

Zubin and and Richard spoke about this in great detail in the $WTC call (which I am still digesting). As Zubin said "The era of manually writing code as the core act of engineering is over.”

Richard went on to expand:

"We've been working on this for a long time now, the AI piece just gives us additional advantage. I'll be a bit more bold in terms of the software development. Yes, you know, it is hard thing to do to transition a company from a model where most of the code is written by humans to a model where most of the coding is an orchestration of a very senior person who is a product person or a software architect, but that is the new model. That model could actually have efficiencies of maybe two to 10 times more than what you can get out of any software development team. Individually, people can do far, far more work with AI than they could have done even nine months ago. We're certainly on that journey, and we're very closely connected to what we're doing with Claude Code, what we're doing with ChatGPT, what we're doing with Gemini. There's a huge competition here. There's an arms race going on between the LLMs to make the most efficient thing they can use, and we can take those efficiencies and plug them in to a fundamental moat that we have, and it just really can't be displaced, but it can be accelerated." 

So, what of the 2,000 $WTC job cuts?

First, remember that of $WTC's >7,000 headcount, some 3,300-3,500 were legacy $WTC, and E2Open added some 3,900-4,000.

My estimate is that some 1,500-1,700 of the legacy $WTC were in product development. And therefore likely a similar number at E2Open.

E2Open's business model was to do a lot of customisations to client needs, whereas the $WTC approach is to invest in standard products, than then customers adapt to in implementation. One code base vs. multiple implementation instances.

So, let's assume the combined entity has some 3,000-3,500 people today in product development. RW sees the output of this force supported by AI as being done by as little as one-tenth.

Then you have the sales efficiencies. The new CVP commercial model means that the effort in tailoring a contract is drastically reduced, as the cost to the customer (which is either passed on or absorbed) derives directly from the volume of work. No complexity about numbers of seats or modules used.

So the 2,000 are coming from AI-driven coding productivity improvements + moving E2Open to the $WTC product-led model + phasing out the E2Open services business lines + efficiencies in deploying the new commercial model.

I think the 2,000 is just the start for 2026 and 2027, and that by late-2027 there will be another round announced.

There is no doubt in my mind that this is happening across all software businesses.

As Tom Blomfield (co-found of Monzo Bank and now parter at Y-Combinator) wrote in April last year about agentic AI and its application to software development:

"Software engineers are highly-paid farmers, tending their crops by hand. We just invented the combine harvester…"

@mikebrisy have you put much thought into an updated valuation for Wise tech?

@Schwerms I'm just putting the finishing touches to my note on the $WTC results. It took a lot of work to unpack everything.

SPOILER ALERT!

Basically, there are so many moving parts that I have decided to withdraw my $WTC valuation. I am just writing this up now, and will explain it in the context of what I have been doing with my RL ASX portfolio over recent weeks.

More soon. Thank you for your attention to this matter.

Love that quote @mikebrisy especially when you did into it further.

The part that really stands out for me is how closely this aligns with what Tom Blomfield said about agentic AI. His full quote wasn’t just a throwaway line — it was a description of a structural shift:

“Software engineers are highly‑paid farmers, tending their crops by hand. We just invented the combine harvester. The world is going to have a lot more food and a lot fewer farmers in very short order.”

That’s exactly what we’re seeing here. If AI turns software engineering into orchestration rather than typing, then the old model of “thousands of engineers = moat” is finished. E2Open’s services-heavy, bespoke‑implementation model becomes the hand‑tended field. WTC is moving to the combine harvester.

And this is where WTC is fundamentally different from traditional SaaS like Xero. Xero’s moat is behavioural — workflows, familiarity, accountants. AI erodes that because it makes it easier for small teams to build competing products.

WTC’s moat is structural. It sits on top of a global supply‑chain network with thousands of integrations, regulatory rails, carrier connections and billions of transactions flowing through it. You can’t replicate that with AI — if anything, AI makes the existing network more valuable because it lowers the cost of maintaining and extending it.

So the 2,000 job cuts aren’t hollowing out the business. They’re the first step in shifting from hand‑tended crops to industrialised production. And once you see it through that lens, it’s hard not to think there’s another wave coming in 2027.

Discl: Holding and looking to get more.

Update from Jack:

Look, I'm still skeptical how much of this is AI related, and how much is: we want to reduce headcount and we've found a good story to wrap around it.

Certainly some jobs will be more efficient with the addition of AI tools. But some of these jobs are not being replaced by AI. They'll just go away because they wen't actually doing anything very useful.

Having listened to the H1 call there is a fundamental improvement in productivity in the customer service and product development areas due to AI (not job shifting). Also this in not just something that they have thought up since the share price went south in the last 6 months. Below is AI journey they have taken which Richard talked to:

I don’t have time currently for a full write up on the H1 results and presentation but this is the general “vib” I have which follows hand in glove with how I felt coming out of the December Investor Day.

Wisetech is becoming the Microsoft of global logistics and trade, ie the operating system for moving and managing inventory around the world. It is doing this by creating enormous value for customers in terms of systems and efficiency which it will through ongoing enhancements capture a large portion of the value created. It is also looking internally for those efficiencies and in both cases AI is a significant value driver. In short revenue per customer will grow significantly, the attraction for new customers will become irresistible and the cost base to grow and provide this will shrink with an expectation to return to 50%+ EBITDA margins in the short to medium term.

I am exceptionally bullish on Wisetech, seeing it as well placed to dominate global logistics, drive down the cost of global logistics and capture a large portion of the value created. The 2000 job reduction could save ~US$200m a year, ie basically double current profit (not until FY27 and I wouldn’t be that aggressive in any forecasting, but it is very material).

I have an overweight position and am looking to add more at the current price if I can free up some capital.

Disc: I own RL+SM

I'm like you @Tom73 I’m very bullish on WiseTech long term, but I’m also being patient here.

The strategic direction is undeniable — they’re positioning themselves as the operating system for global logistics, and the value they can extract from that position is enormous. The AI leverage is real too: higher revenue per customer, deeper integration, and a structurally lower cost base. That combination is rare in SaaS.

But I still think the market needs to see a couple more proof points before the share price finds its floor.

Every company is talking about AI efficiency right now, and plenty are using it as a convenient wrapper for cost cuts. WiseTech looks like one of the few that can genuinely execute on it, but they still need to demonstrate that they’re not going to be hit by the same AI‑driven margin pressure we’re seeing elsewhere in software.

So for me, the long‑term thesis is intact — even strengthening — but I’m waiting for the right moment to add. I’d like to buy more, I’m just not convinced we’ve seen the final leg down yet. Once they prove they can absorb AI disruption rather than be disrupted by it, that’s when the risk/reward really opens up.

Disclosure: Own WTC wanting to accumulate more.