COVID-19 forces SaaS firm Zoho to change tack

Sridhar Vembu, founder and CEO of Zoho Corp, says VC money always comes with strings attached

The coronavirus pandemic has forced Chennai-based SaaS firm Zoho to have a relook at its business model.

"Things cannot go on as before and companies will have to do a lot of rethinking, said Sridhar Vembu, CEO, Zoho Corp.

For most SaaS firms, majority of the revenue comes from overseas and India accounts for a small portion. According to him, this should change.

More domestic focus

"So, 90 percent of Zoho's revenue comes from outside. In the normal world, it would be considered safe. But in the emerging world, it is going to be a worry," he said.

For Zoho, US accounts for about 45 percent of overall revenue. The company’s revenue was Rs 1982.44 crore in FY17.

"Som the 90-10 pattern we have right now cannot continue. So it will be either 70-30 (70 being overseas) or 50-50," he added.

For that to happen, Indian firms have to innovate and launch products that are relevant.

"We are trying to improve our domestic revenue and we have been doing so systematically for the past 10 years," Vembu said. The company's India revenue has increased from negligible to 10 percent over the decade, he added.

Where will the growth come from?

So far most of the SaaS companies had pointed out that the lack of market in India unlike the US. In addition Indian customers are also price conscious. However with COVID-19, things are slowly beginning to change as the consumers are willing to invest in expensive enterprise software as they migrate to cloud.

“We also see our remote work tools driving our growth,” he added. Zoho was probably one of the first companies to launch remote working tool mid-March just as COVID-19 pandemic intensified. In a tweet, he said the tool was designed remotely by Zoho engineers in a week.

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Zoho's remote working suite, Remotely, includes Meeting for video conferences, Cliq for team communication and project management tools.

As products like Zoom and Microsoft Teams gain traction, the company is completely focused on enhancing Zoho Meeting to include 50 person video meetings and make it more efficient. Currently it can handle about 25. The suite free for everyone to use till July 1.

Zoho is also cutting down its marketing spend and is focusing on building its business. The company is reaching out to potential customers and increasing awareness through Twitter and other medium for its products.

“In the meantime the company will continue to innovate. In the next six months to a year the company is looking at a lot of innovation,” Vembu said.

Remote locations

After the virus outbreak, Vembu said that visa situation is likely to worse and India might find it difficult to export its people. So there is a need to take a look at what kind of products and services companies can create and export. This would also impact what we consider workspaces in the coming months.

Currently 99 percent of Zoho employees are working from home. According to its website, there are close to 7,000 employees. Once the pandemic is under control, the company is looking at creating more remote offices in rural parts.

“I am thinking of starting remote offices in Tenkasi with 10-20 people,” he said.

“In my conversation with employees, I can see that more of them are willing to relocate to smaller towns,” he explained and added this expansion will likely to continue.

The company has one office in a village near Kumbakonam and another in Srirangam. Both the locations are close 250-300 kms from Chennai.

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