We will not resort to layoffs. I want to keep that promise: Sridhar Vembu

Sridhar Vembu, Founder and CEO, ZOho  Image: Hemant Mishra

Zoho, India’s only billion-dollar software products company by revenue, is investing in semiconductor chips and data centre hardware as part of its efforts to secure its long-term future, says Sridhar Vembu, its founder and CEO. Edited excerpts from an interview:

Q. What are some of the biggest areas you’re working on?
The biggest area we are working on is how to improve the productivity in software development. That’s part of what I think is a big deal. We are working deeply in that R&D. I believe that productivity in software development itself can be easily tenfold, maybe 20-30-fold in the long term.

Q. From your vantage point, can you give us a sense of the outlook for the Indian SaaS sector over the next few quarters?
To understand where we are today, we have to understand what went on. Before, we had a truly massive bubble. A lot of investment came in, a lot of money got spent unwisely, often unproductively. And now we are seeing the reckoning. The funding has dropped like over 70 percent now, and that is inevitable. We have seen this cycle before and multiple times in Silicon Valley, everywhere.

So, this is a natural reckoning, and it will bottom out, and then a new funding cycle will start, but it won’t necessarily be in the same area. And I hope it’s not, because we have to invest in diverse areas of R&D, not just SaaS (software as a service). SaaS has become a crowded train. Everyone’s crowded into SaaS.

Q. When you look at the next set of companies, can you talk about their big challenges as they try to become larger companies like Zoho has done?
The primary challenge today in SaaS is that customers don’t want to deal with, say, 500 vendors. So, you have to put all these together and they don’t want to do the integration. And we have to do the pre-integration. We have to offer deep value, make it affordable and so on. If we navigate that well, there is very good business success possible here.

Also read: Sridhar Vembu is preparing Zoho for the rise of India

Q, Can you give us a quick update on your investments in hardware?
We have products shipping today in medical instruments through our V Titan subsidiary. And we have data centre hardware that we are building, so that our data centres will have more of our own hardware. We have a significant investment in semiconductor design. We are going to put those chips to work, some of them in our own infrastructure longer term. And we have FPGA investments going on so that we can squeeze more performance out of our hardware.

Q. Over the next 12-18 months, what might be your top priorities at Zoho?
Navigating these potentially challenging economic times, these were challenging even before the latest events in the Middle East, and they have added a huge layer of concern on top of what was already a slowing global economy. Navigating that would be a primary challenge. And we have guaranteed to our employees we will not resort to layoffs. I want to keep that promise. So, navigating this in a way that we take care of our customers and take care of our employees. Meanwhile, also investing so that we can secure our long-term future.