Bootstrapped Software-as-a-Service (SaaS) major Zoho is focusing on maintaining a strong balance sheet and keeping its net debt zero even as the company has made a commitment to its employees that layoffs will be the absolute last thing at the firm.
This comes on the heels of a global economic slowdown coupled with a fear of recession in the US. Most of the SaaS companies in India have around 80% of their businesses in the US and UK.
“We understand that times are tough but we have made a commitment to the employees that layoffs would be the absolute last thing we will ever think about because it kind of destroys loyalty,” said Zoho’s co-founder and chief executive Sridhar Vembu on the sidelines of the CNN-News18 Indian of the Year 2022 awards event on October 12.
"If we want our employees to be loyal, we have to be loyal to them. Even when times are tough, with a strong balance sheet and strong unit economics, we need to retain our talent here," Vembu added.
Several top SaaS companies including Zoho have slowed down hirings and are rationalising their employee costs to stay afloat during the tough times.
“We have definitely slowed down hiring because the environment is getting difficult and growth rates have come down and may get more difficult is my forecast,” Vembu said.
In fact, many startups are undertaking layoffs to save cash and extend the runway as VC funding has slowed. Byju’s, the world's most valued edtech startup, laid off around 2,500 employees across departments to cut costs.
Lightspeed-backed edtech startup FrontRow too had laid off around 130 employees four months after sacking a similar number of employees.
Zoho’s Vembu stressed the importance of building long-term goals to sustain in tough economic situations.
"In this environment, every company should have a long-term goal. Zoho has navigated by maintaining a strong balance sheet and zero debt, and preparing ourselves for this kind of adverse event. And investing in long-term research and development (R&D),” he said.
Vembu and Tony Thomas, co-founders of Indian multinational technology company Zoho, were announced as the winners of the CNN-News18 Indian of the Year 2022 Award for the startups category.
Presenting the award to Vembu at the ceremony in Delhi, Union Minister Piyush Goyal called him one of the finest entrepreneurs who completed his success journey across the world and came back to India and its small towns to develop Zoho in a ‘Ghar Wapsi’ .
“Not only Sridhar earned a very big name for himself across the world in the startup space, but after all his successes, he has chosen to come back to India, work in the villages in India, be amongst Indian boys and girls to empower them,” Goyal said.
Advising future young entrepreneurs, Vembu said that "every entrepreneur must have to develop some convictions, stay true to them, and be persistent with those convictions. It does take time but it is worth it”.