Forbes India 15th Anniversary Special

Sridhar Vembu is preparing Zoho for the rise of India

In the coming years, Sridhar Vembu believes it is inevitable that the country will become the biggest market for the company

Harichandan Arakali
Published: Nov 21, 2023 02:57:44 PM IST
Updated: Nov 21, 2023 03:50:36 PM IST

Sridhar Vembu is preparing Zoho for the rise of IndiaSridhar Vembu, Founder and CEO, ZOho  Image: Hemant Mishra

Earlier this year, Zoho crossed 100 million users of its software products. And the company had some 15,000 employees, founder and CEO Sridhar Vembu told reporters at the company’s annual Zoholics conference, held in Bengaluru, in October.

“But this is nothing,” he said. “From a business perspective, there are close to two billion people in the global information worker base”, using computers, mobile phones and digital tech to get work done.

That gives one an idea of the potential for growth for Zoho and such companies, he said. And within that, “India is our fastest growing market,” growing well ahead of the company’s average.

Today, India is the biggest market after the US and EU for Zoho, and Vembu expects it will become the second biggest over the next three to four and “in 10 years I think it could be the number one market… that’s I think where you see that trajectory here and now, the substantial number base now to grow upon. So, I’m very bullish on India.”

While India might become a large market over the next decade, the global business software landscape today is one of fragmented products. There are specific areas where one or the other vendor is strong, but no one company has a comprehensive suite of business software products yet, he explained.

Among Zoho’s products, the company is seeing good traction for its Zoho One platform, its CRM Plus suite, its products for HR, finance and software, he said.

The company recently launched its finance software in new markets, including Germany and Mexico. And banking and financial services, overall, is a fast-growing segment for the company. Much more investment is needed in “going deep” in each area and “stitching it all together is a top priority”, he said.

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In terms of demographics, from last year’s numbers, India had more babies than two Chinas plus an America, and a Japan thrown in, Vembu pointed out. “And the world is catching up to that.”

“What we see in the whole startup ecosystem is a tiny microscopic thing of what the big picture is. We should be investing in lot more R&D in India.” Global companies are setting up what they now call global capability centres in India which is where more and more critical R&D happens.

What is also happening is that in many multinational companies, more global decision making is shifting to India. “It’s no longer the outsourcing of the past.” This is an extension of the phenomena where one sees top executives in big American and European companies are India born. “But IT decision making is actually shifting to India”—for global operations.

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“We are starting to see that when we pitch to the Indian arm of a company, it’s not just that anymore… it’s actually the global position increasingly shifting to what the India arm is doing. We are seeing that in many major companies.”

Zoho itself, as an organisation, is embracing the hub-and-spoke model, directing most of its hiring to regional locations and reducing the footprint at its Chennai headquarters “simply because we have just too many people in our campus and it already feels overcrowded”, he said.

And the company is using its own products to keep its productivity high. For example, Zoho has built a team collaboration product, with the brand name Zoho Cliq, which Vembu claims is superior to Slack. The company’s 15,000 staff, including top management, uses Cliq for everything—from townhalls to small meetings and keeping one another up to date.

This happy hybrid middle ground combines the best of both worlds, Vembu said—the social interaction of working in-person with colleagues in an office and affording the convenience of placing talented people closer to their homes. “That’s the model that we are moving towards as a company,” he added.

Now, Vembu wants to extend that to the next level to see if small centres in regional locations can also become facilities for high-end research—from chip design to AI (artificial intelligence). Vembu recently co-chaired a government of India apex committee to decide upon centres of excellence in AI for India.

At Zoho, he is pushing the company to develop capabilities in not only software, but also hardware. The company is pursuing a dual strategy for the next few years, where, on the one hand, it will use what is available, be it GPUs from NVIDIA or AMD or existing large language models, while in parallel, investing in deep R&D to build its own capabilities.

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Specific to large language models, Zoho’s approach will be to build models that will probably be a fraction of the size of the models on which tools like ChatGPT run.

This can be done by identifying the appropriate narrowly focussed projects, Vembu said. AI models specifically focussed only for accountants, for example, or for HR. And then there will be another layer that will take a query or task and send it to the right model This approach can be a much more technically viable as well as an affordable strategy, he said.

Finally, “I am personally working on another area which is part of the broader whole. I call it programmer productivity,” Vembu said. The key here is to build solutions that will almost always be correct, in developing code, as against the hallucinations that are possible with ChatGPT.

Vembu is working on software that can help developers generate correct code “by design”. At some point, Zoho will begin to apply this technology to building its future products.

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