Chegg to lay off 22% of workforce, close US and Canada offices amid shift to AI tools like ChatGPT.

Chegg to lay off 22% of workforce, close US and Canada offices amid shift to AI tools like ChatGPT.

In a significant move to adapt to the changing educational landscape, Chegg Inc. has announced plans to lay off 22% of its workforce, approximately 248 employees, and close its U.S. and Canada offices. This decision comes as students increasingly turn to AI-powered tools like ChatGPT and Google Gemini, which are proving to be more cost-effective and accessible alternatives to traditional educational platforms [1].

The shift towards AI has had a profound impact on Chegg's business model. In May 2023, the company's stock plummeted by nearly 50% following the acknowledgment that OpenAI's chatbot was negatively affecting its new customer growth rate. This decline has been long-lasting, with Chegg's market value dropping approximately 90% since its IPO in 2013 [1].

Chegg CEO Nathan Schultz has cited the rapid proliferation of generic AI tools as a fundamental challenge to the company's traditional business. Students are increasingly abandoning subscription-based homework help platforms in favor of free or low-cost AI alternatives that provide instant answers. In response, Chegg is pivoting towards a more holistic "360 degrees" support model that includes financial literacy and early career learning to differentiate itself from AI competitors [1].

The impact of AI on Chegg's performance is evident in its recent financial results. The company reported a decline in subscribers and subscription revenue, with revenue plunging 30% to $121 million in the first quarter of 2025. Chegg expects cost savings of between $45 million and $55 million in 2025, and $100 million to $110 million in 2026, as part of its restructuring efforts [3].

Chegg's layoffs and office closures are part of a broader trend in the professional services industry. AI is driving workforce reductions, with major accounting firms like PwC also cutting jobs. PwC, one of the "Big Four" accounting firms, recently announced layoffs for 1,500 employees, or about 2% of its U.S. workforce, as part of a three-year partnership with Microsoft and OpenAI [2].

The changes at Chegg and PwC highlight the broader impact of AI on the workforce. According to a McKinsey report, 30% of hours worked will be reduced or removed with automation in the next five years. While AI is not the sole reason for these changes, it is a significant factor driving workforce layoffs and restructuring [2].

Chegg's decision to lay off 22% of its workforce and close its U.S. and Canada offices is a strategic move to adapt to the evolving educational landscape. The company is taking steps to reduce costs and streamline its operations, while also repositioning itself to compete in the AI-driven edtech market. As AI continues to reshape the educational technology landscape, companies like Chegg will need to innovate and adapt to survive.

References:
[1] https://www.perplexity.ai/discover/entertainment/chegg-to-lay-off-22-of-staff-a-nsAFJuH.RFqdG1LsLcFhgg
[2] https://www.forbes.com/sites/chriswestfall/2025/05/07/chatgpts-largest-enterprise-user-pwc-cuts-workforce-by-1500-jobs/
[3] https://nypost.com/2025/05/12/business/chegg-to-slash-22-of-workforce-as-ai-bots-steal-students-from-homework-help-tools/