Cybersecurity company Deepwatch cuts dozens of jobs, citing a shift to accelerate AI investments
Deepwatch’s recent layoffs and AI investment shift.Deepwatch, a Denver-based cybersecurity firm specializing in AI-powered detection and response, laid off
Deepwatch’s recent layoffs and AI investment shift.Deepwatch, a Denver-based cybersecurity firm specializing in AI-powered detection and response, laid off between 60 and 80 employees on Wednesday, representing up to 32% of its roughly 250-person workforce. CEO John DiLullo told TechCrunch in an email that the company is aligning its organization to accelerate significant investments in AI and automation. The layoffs hit hardest among security analysts and operations staff—the very humans Deepwatch’s AI is supposedly designed to augment, not replace. A current employee, speaking anonymously to TechCrunch, dismissed the AI rationale as corporate speak, stating that while they’re doing something with AI and agentic AI, it sounds like nonsense. Eight former Deepwatch employees confirmed their departures on LinkedIn, with some posts suggesting the cuts weren’t performance-based but purely strategic.
Deepwatch is not the only cybersecurity company conducting layoffs this year—in May, CrowdStrike laid off around 500 workers despite recording operating cash flow of $1.38 billion and record free cash flow of $1.07 billion. Other cybersecurity companies that have cut their workforce this year include Deep Instinct, Otorio, ActiveFence, SkyBox Security, and Sophos. The wave of layoffs contradicts the industry’s public narrative about talent shortages and explosive growth, as cybersecurity spending continues climbing while companies increasingly prioritize AI-driven efficiency over human headcount. According to the latest ISC² Cybersecurity Workforce Study, there is a global deficit of nearly 4 million cybersecurity professionals, illustrating why AI-augmented security operations centers are attractive, though vendor staffing changes can affect service levels if not managed carefully.
For Deepwatch specifically, the cuts signal either confidence in AI’s ability to handle complex security operations or financial pressure requiring dramatic cost reductions, as the company’s managed detection and response platform competes against giants like IBM, Microsoft, and CrowdStrike. The company struggled after closing a $180 million Series C round led by Splunk Ventures in February 2023, with headcount dropping by 19% in 2024 and 9% in 2025 before the latest layoffs. The layoffs raise questions about customer service continuity, as security operations require continuous monitoring and rapid incident response where human expertise and institutional knowledge matter significantly. Deepwatch’s substantial workforce reduction represents more than cost-cutting—it’s a high-stakes bet that AI can fundamentally reshape cybersecurity operations, signaling an accelerating shift toward automation-first security models even if the human cost remains significant.



