Willing To Accept Profit Cuts, Loss For Certain Period: Sridhar Vembu On Persisting With No Layoffs
Zoho Corporation CEO Sridhar Vembu told BW Businessworld on Monday that he was willing to take a reduction in profit and losses for a certain period to persist with the company’s no-layoffs policy despite the tough times globally.
During an interview with BW Businessworld, Vembu said that all companies should take it month-to-month on their plans and focus on fundamentals in the current scenario that is being dictated by macroeconomic challenges.
He insisted it is important for companies to focus on research and development (R&D) and building a company culture as it would matter in the long run. “That's why we have taken a no-layoff policy at Zoho. We would rather share the pain with our employees,” he said.
He added that Zoho was a profitable company and willing to take a reduction in profit margins to stay away from layoffs. “That's why you build up your reserves during good times so that you can take a loss during bad times. That way the employees have a measure of security, which translates into longer term R&D culture. That’s what we want to do.”
The statement from Vembu comes at a time when the world’s most valuable companies including Google, Meta, Microsoft, Amazon, Twitter, Disney, Accenture, Indeed, McKinsey, Zoom, Yahoo, SAP, Walmart and many more have announced thousands of job cuts individually. The total number of layoffs at major companies in 2023 stands at about 2,00,000 in 2023 so far.
According to a Bloomberg report, Apple, which has so-far stayed out of the layoff saga, is looking at cutting job roles from its retail team.
These companies had admittedly over-hired anticipating a greater tech boom, only to realise they had made a mistake as things worsened in 2022 and 2023. With the banking crisis unfolding, the macroeconomic situation is expected to worsen and cause a recession.
But Vembu said that retaining employees in the current climate will provide Zoho employees a measure of security, which would translate into a longer-term R&D culture.
Record Customer Wins In March
The Zoho CEO believes that the signs are positive for his company despite the anticipated drop in tech spends all over the world in 2023. During a press conference at Zoho’s Tenkasi office on Monday, he said that the company had signed up its highest-ever number of customers in a month during March 2023.
While Vembu accepted that he could not have predicted such an occurrence, he said that the company had observed this divergence six to nine months ago when the number of customers signing up was growing but the size of revenue had dropped causing a decline in profits. But the Zoho CEO identified this as a positive because he felt customers choose Zoho despite the economic conditions.
“I would’ve hoped for this but I certainly didn’t predict this. Now, they (customers) will begin to trust the Zoho model and expand their business with us,” said Sridhar Vembu.
He informed the media in attendance that Zoho Suite alone had six lakh customers in 2023 and the number would reach one million in the time horizon of one-and-half years.
Speaking to BW Businessworld, Vembu also said companies doing business with Salesforce in India or ServiceNow are massively overpaying and that those technologies are not “worth it”.
“We can replace them at enormous savings. This is true for our US customers and it is also true for European customers. This applies to our Indian customers as well. And we saw that switch just last month when we won a lot of deals in March,” he said.
“I consider companies like Salesforce extremely bloated and expensive in terms of their product offerings and their pricing,” Vembu added.
Vembu noted that Zoho could compete aggressively for business with Salesforce and ServiceNow in the present tough market conditions by offering a good choice, in terms of both superior products and vastly superior value. “That is why we think that even in an environment of tough IT spending, we are doing better,” he said.
Also Read: Sridhar Vembu’s Not Sold On End Of Global Banking Turmoil; JPMorgan’s Dimon Concurs
