Coimbatore Saas firm Kovai.Co rules out layoffs, will be cautious on new hires, spends

Saravana Kumar, founder and CEO, Kovai.co

Despite tight macroeconomic conditions, Coimbatore-based Software-as-a-Service (SaaS) firm Kovai.Co does not plan layoffs but will go for disciplined spending and hiring, the company told its employees.

“In an internal note I have said that there will be no layoffs, I have always believed in maintaining a spending and hiring discipline, we have always hired cautiously and organically,” founder Saravana Kumar said in an interaction with Moneycontrol.

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While many companies hired a massive number of people with unreasonable salary packages, Kovai.Co stayed conservative and grew the team in a structured manner, Kumar said, adding, "we will continue to do that."

Adding headcount

Kovai.Co has around 240 employees and may add another 40-50 people in 2023. The firm is planning to reach an annual recurring revenue (ARR) of $30 million by 2025, from $10 million now.

“There is no hard stop in hiring, we are still filling key positions…but we are also focusing on making our current workforce more productive,” he said.
The company is revisiting its current employee compensation packages and training models to help retain and build existing talent and increase productivity.

The firm on Thursday inaugurated its additional 4,500 square feet of office space in Coimbatore, it said in a media statement.

“We expect hiring to continue at a steady pace in 2023. The focus will be on building capabilities of employees, learning and development, and helping customers derive value from the products like Churn360, Document360, and Serverless360 on a day-to-day basis,” said Kumar.

Recession impact

Talking about the impact of the global recession on the business, Kumar said that while some enterprise products may have a small impact, other products like Churn360 are gaining more traction. Kovai.Co is working on ways to bring down its customer acquisition cost (CAC), which tends to go up in a recession.

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“We do run paid ads, however, that is a small part of the marketing campaign. We are also tapping cheaper but effective sources of marketing like podcasts, etc, to keep our CAC low,” Kumar said.

Founded in 2011 by Kumar, a Microsoft Integration Architect, the bootstrapped company is planning to look for external investors.

“We are not shutting down investors, we are still mulling on bringing external investors who can bring in smart money and help us grow,” Kumar said.

Kovai.Co is looking to scale up its products in the US and is eyeing niche markets. “We are doing a lot of smaller experiments in niche markets like Israel, and we will keep identifying markets where the CAC is still reasonable,” Kumar said.