Zoho CEO Sridhar Vembu has sharply criticised Freshworks for laying off a significant portion of its workforce while simultaneously prioritising shareholder returns through a USD 400 million stock buyback.
Vembu’s comments, made on X (formerly Twitter), come after Freshworks revealed it would be trimming 13 per cent of its workforce, equating to around 660 employees, even as it announced the massive buyback. This announcement followed Freshworks’ earnings report, which showed the company continuing to grow at a solid rate of 20 per cent annually and generating a cash profit.
Vembu expressed his dismay, pointing out that a company holding over USD 1 billion in cash, which is nearly one and a half times its annual revenue, should not resort to layoffs when it is still expanding.
He described the decision to lay off workers while executing a stock buyback as “naked greed” and suggested that such a company should not expect loyalty from its employees. Vembu further questioned whether Freshworks lacked the vision to invest the buyback funds in new areas of business that could utilise the talent it had recently let go.
Vembu said that Zoho, in contrast, had chosen to remain a private company to ensure that employees and customers came first, rather than shareholders.
The criticism came a day after Freshworks’ CEO Dennis Woodside announced the layoffs, which are part of a broader strategy to improve efficiency and reduce complexities across teams. Freshworks, which employs over 5,000 people, has already undertaken several rounds of layoffs and management changes throughout 2024, including a significant leadership reshuffle in May, which saw founder Girish Mathrubootham transition to the role of executive chairman while Woodside took over as CEO.
The relationship between Zoho and Freshworks has long been strained, with a history of legal disputes. Freshworks’ founder, Girish Mathrubootham, was previously a senior executive at Zoho before founding Freshworks in 2010. The two companies were involved in a lawsuit in 2020, when Zoho accused Freshworks of stealing confidential information. The case was settled in 2021, with Freshworks admitting that a former employee had improperly accessed and used Zoho’s data.
