Bucking the trend of IT firms freely laying off in the thousands, Zoho Corp co-founder and CEO Sridhar Vembu said that the company is “cautiously optimistic” about its growth prospects in the coming fiscal.
Performance growth
Chennai-based software-as-a-service (SAAS) major, Zoho Corp doesn’t expect stellar growth rates in FY23 but in the words of Vembu, the company is “cautiously optimistic” about its growth prospects in the coming fiscal.
The company reported profits of Rs 2,748.83 crore for FY22, an outstanding rise of 43 percent, year-on-year.
“We have built a strong investment R&D and this is showing up in the numbers that you see,” said Vembu.
He frankly said, “We certainly don’t expect 43 percent growth continuing this year owing to challenges, but we are cautiously optimistic.”
No layoffs planned
Vembu said that the company was looking to increase its headcount by 1,000 and has no plans to lay employees off.
He added: “We will not resort to layoffs because that isn’t part of our culture — we want our employees to feel secure about their jobs — but our hiring has drastically slowed down.
We still want to hire 1,000 people this year across the board, especially in R&D sales and support.”
India its second-largest market
Fears of sustained slowdown notwithstanding, what comes as good news for Zoho Corp is the performance of its enterprise IT management division, ManageEngine.
It said that India is set to become its second-largest market in three years, thanks largely to the pace of cloud adoption here.
ManageEngine reported a year-on-year growth of 50 percent in its India business for 2022.
Customer count witnessed an uptick of 30 percent driven primarily by demand from BFSI, real estate, and manufacturing sectors.
The release added that ManageEngine would “soon reach $1 billion” in revenues.
India’s potential
Vembu commented on the potential India presents for the company:
“Digital transformation in India is continuing even though we’re leapfrogging many advanced countries in terms of digital payments and in other spheres as well”.
Further, he believes India has the resources to continue this pace of digital transformation and cloud adoption and said that Zoho is “working to ensure our customers get the best products and experiences.”
Opinion on drivers of economic growth
Greater R&D investment, he opines, is essential for the Indian economy to grow amid challenging circumstances, calling it a non-negotiable.
“The industry needs to be incentivised in order for this to happen,” he said, “R&D investment as a share of India’s GDP is still low, and that is a problem that can be solved only by way of incentivising R&D spend.”
Challenging circumstances
Zoho’s deal sizes continue to shrink despite a spike in customer count.
Commenting on that, he said, “While the Indian economy has held up remarkably well, the challenge for us is how well we navigate global circumstances.
We managed well during the pandemic, but we need to be prepared now for the debt bubble collapse and how we navigate it.”
In 2022, Zoho reported revenues of $1 billion, even as Sridhar warned that the economic slowdown could continue for two to three years.
An Economic Survey forecast a slowdown of between six and 6.8 percent next fiscal before a slight recovery in 2024.
